Correlation Between Visa and First Eagle
Can any of the company-specific risk be diversified away by investing in both Visa and First Eagle 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 First Eagle 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 First Eagle Overseas, you can compare the effects of market volatilities on Visa and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and First Eagle.
Diversification Opportunities for Visa and First Eagle
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and First is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and First Eagle Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Overseas 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Overseas has no effect on the direction of Visa i.e., Visa and First Eagle go up and down completely randomly.
Pair Corralation between Visa and First Eagle
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.75 times more return on investment than First Eagle. However, Visa is 1.75 times more volatile than First Eagle Overseas. It trades about 0.35 of its potential returns per unit of risk. First Eagle Overseas is currently generating about -0.09 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. First Eagle Overseas
Performance |
| Timeline |
| Visa Class A |
| First Eagle Overseas |
Visa and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and First Eagle
The main advantage of trading using opposite Visa and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Value | First Eagle vs. Calamos Growth Fund | First Eagle vs. First Eagle Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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