Correlation Between Visa and First Investors
Can any of the company-specific risk be diversified away by investing in both Visa and First Investors 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 Investors 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 Investors Select, you can compare the effects of market volatilities on Visa and First Investors 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 Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and First Investors.
Diversification Opportunities for Visa and First Investors
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Visa i.e., Visa and First Investors go up and down completely randomly.
Pair Corralation between Visa and First Investors
Taking into account the 90-day investment horizon Visa is expected to generate 1.25 times less return on investment than First Investors. In addition to that, Visa is 1.27 times more volatile than First Investors Select. It trades about 0.07 of its total potential returns per unit of risk. First Investors Select is currently generating about 0.1 per unit of volatility. If you would invest 1,169 in First Investors Select on September 1, 2024 and sell it today you would earn a total of 209.00 from holding First Investors Select or generate 17.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. First Investors Select
Performance |
| Timeline |
| Visa Class A |
| First Investors Select |
Visa and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and First Investors
The main advantage of trading using opposite Visa and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, First Investors 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 Investors will offset losses from the drop in First Investors' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| First Investors vs. Old Westbury Large | First Investors vs. Qs Large Cap | First Investors vs. Morningstar Unconstrained Allocation | First Investors vs. Principal Lifetime Hybrid |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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