Correlation Between Visa and FFW
Can any of the company-specific risk be diversified away by investing in both Visa and FFW 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 FFW 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 FFW Corporation, you can compare the effects of market volatilities on Visa and FFW 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 FFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FFW.
Diversification Opportunities for Visa and FFW
Weak diversification
The 3 months correlation between Visa and FFW is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Visa i.e., Visa and FFW go up and down completely randomly.
Pair Corralation between Visa and FFW
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than FFW. However, Visa Class A is 3.4 times less risky than FFW. It trades about 0.07 of its potential returns per unit of risk. FFW Corporation is currently generating about 0.01 per unit of risk. If you would invest 22,557 in Visa Class A on October 21, 2024 and sell it today you would earn a total of 9,405 from holding Visa Class A or generate 41.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.79% |
| Values | Daily Returns |
Visa Class A vs. FFW Corp.
Performance |
| Timeline |
| Visa Class A |
| FFW Corporation |
Visa and FFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FFW
The main advantage of trading using opposite Visa and FFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, FFW 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 FFW will offset losses from the drop in FFW's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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