Correlation Between Visa and Equitable
Can any of the company-specific risk be diversified away by investing in both Visa and Equitable at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Equitable Group, you can compare the effects of market volatilities on Visa and Equitable and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Equitable.
Diversification Opportunities for Visa and Equitable
Average diversification
The 3 months correlation between Visa and Equitable is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Visa i.e., Visa and Equitable go up and down completely randomly.
Pair Corralation between Visa and Equitable
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.6 times more return on investment than Equitable. However, Visa Class A is 1.67 times less risky than Equitable. It trades about 0.1 of its potential returns per unit of risk. Equitable Group is currently generating about 0.05 per unit of risk. If you would invest 27,349 in Visa Class A on November 8, 2024 and sell it today you would earn a total of 7,595 from holding Visa Class A or generate 27.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Visa Class A vs. Equitable Group
Performance |
| Timeline |
| Visa Class A |
| Equitable Group |
Visa and Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Equitable
The main advantage of trading using opposite Visa and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Equitable can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Equitable will offset losses from the drop in Equitable's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
| Equitable vs. goeasy | Equitable vs. Canadian Western Bank | Equitable vs. TFI International | Equitable vs. Intact Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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