Correlation Between Visa and Federated Mid-cap
Can any of the company-specific risk be diversified away by investing in both Visa and Federated Mid-cap 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 Mid-cap 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 Mid Cap Index, you can compare the effects of market volatilities on Visa and Federated Mid-cap 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 Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Federated Mid-cap.
Diversification Opportunities for Visa and Federated Mid-cap
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and FEDERATED is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Visa i.e., Visa and Federated Mid-cap go up and down completely randomly.
Pair Corralation between Visa and Federated Mid-cap
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.16 times more return on investment than Federated Mid-cap. However, Visa is 1.16 times more volatile than Federated Mid Cap Index. It trades about 0.1 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about 0.11 per unit of risk. If you would invest 27,343 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 4,165 from holding Visa Class A or generate 15.23% 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. Federated Mid Cap Index
Performance |
| Timeline |
| Visa Class A |
| Federated Mid Cap |
Visa and Federated Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Federated Mid-cap
The main advantage of trading using opposite Visa and Federated Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Federated Mid-cap 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 Mid-cap will offset losses from the drop in Federated Mid-cap's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Federated Mid-cap vs. Federated Max Cap Index | Federated Mid-cap vs. Federated Mdt Large | Federated Mid-cap vs. Federated Total Return | Federated Mid-cap vs. Dreyfus Smallcap Stock |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |