Correlation Between Visa and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Visa and Federated Hermes 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 Federated Hermes 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 Federated Hermes Sdg, you can compare the effects of market volatilities on Visa and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Federated Hermes.
Diversification Opportunities for Visa and Federated Hermes
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Federated is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Federated Hermes Sdg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Sdg 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Sdg has no effect on the direction of Visa i.e., Visa and Federated Hermes go up and down completely randomly.
Pair Corralation between Visa and Federated Hermes
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.13 times more return on investment than Federated Hermes. However, Visa is 1.13 times more volatile than Federated Hermes Sdg. It trades about 0.09 of its potential returns per unit of risk. Federated Hermes Sdg is currently generating about 0.05 per unit of risk. If you would invest 20,975 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 10,533 from holding Visa Class A or generate 50.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Federated Hermes Sdg
Performance |
| Timeline |
| Visa Class A |
| Federated Hermes Sdg |
Visa and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Federated Hermes
The main advantage of trading using opposite Visa and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Federated Hermes vs. American Funds Smallcap | Federated Hermes vs. American Fds Smallcap | Federated Hermes vs. Smallcap World Fund | Federated Hermes vs. Smallcap World 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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