Correlation Between Visa and Foot Locker
Can any of the company-specific risk be diversified away by investing in both Visa and Foot Locker 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 Foot Locker 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 Foot Locker, you can compare the effects of market volatilities on Visa and Foot Locker 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 Foot Locker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Foot Locker.
Diversification Opportunities for Visa and Foot Locker
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Foot is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker 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 Foot Locker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foot Locker has no effect on the direction of Visa i.e., Visa and Foot Locker go up and down completely randomly.
Pair Corralation between Visa and Foot Locker
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.37 times more return on investment than Foot Locker. However, Visa Class A is 2.74 times less risky than Foot Locker. It trades about 0.09 of its potential returns per unit of risk. Foot Locker is currently generating about -0.17 per unit of risk. If you would invest 31,488 in Visa Class A on October 20, 2024 and sell it today you would earn a total of 474.00 from holding Visa Class A or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Foot Locker
Performance |
| Timeline |
| Visa Class A |
| Foot Locker |
Visa and Foot Locker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Foot Locker
The main advantage of trading using opposite Visa and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Foot Locker 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 Foot Locker will offset losses from the drop in Foot Locker's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Foot Locker vs. Qurate Retail Series | Foot Locker vs. Hour Loop | Foot Locker vs. Solo Brands | Foot Locker vs. 1StdibsCom |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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