Correlation Between Visa and Franchise
Can any of the company-specific risk be diversified away by investing in both Visa and Franchise 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 Franchise 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 Franchise Group, you can compare the effects of market volatilities on Visa and Franchise 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 Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Franchise.
Diversification Opportunities for Visa and Franchise
Poor diversification
The 3 months correlation between Visa and Franchise is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Franchise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franchise Group 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 Franchise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franchise Group has no effect on the direction of Visa i.e., Visa and Franchise go up and down completely randomly.
Pair Corralation between Visa and Franchise
If you would invest 25,544 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 8,636 from holding Visa Class A or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.8% |
| Values | Daily Returns |
Visa Class A vs. Franchise Group
Performance |
| Timeline |
| Visa Class A |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Franchise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Franchise
The main advantage of trading using opposite Visa and Franchise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Franchise 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 Franchise will offset losses from the drop in Franchise's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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