Correlation Between Visa and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Visa and Fair Oaks 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 Fair Oaks 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 Fair Oaks Income, you can compare the effects of market volatilities on Visa and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Fair Oaks.
Diversification Opportunities for Visa and Fair Oaks
Poor diversification
The 3 months correlation between Visa and Fair is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Visa i.e., Visa and Fair Oaks go up and down completely randomly.
Pair Corralation between Visa and Fair Oaks
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.92 times more return on investment than Fair Oaks. However, Visa Class A is 1.09 times less risky than Fair Oaks. It trades about 0.34 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.14 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Fair Oaks Income
Performance |
| Timeline |
| Visa Class A |
| Fair Oaks Income |
Visa and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Fair Oaks
The main advantage of trading using opposite Visa and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. SoftBank Group Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Las Vegas Sands |
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.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets |