Correlation Between Visa and FS Credit
Can any of the company-specific risk be diversified away by investing in both Visa and FS Credit 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 FS Credit 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 FS Credit Opportunities, you can compare the effects of market volatilities on Visa and FS Credit 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 FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FS Credit.
Diversification Opportunities for Visa and FS Credit
Very weak diversification
The 3 months correlation between Visa and FSCO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FS Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Credit Opportunities 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 FS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Credit Opportunities has no effect on the direction of Visa i.e., Visa and FS Credit go up and down completely randomly.
Pair Corralation between Visa and FS Credit
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.5 times more return on investment than FS Credit. However, Visa is 1.5 times more volatile than FS Credit Opportunities. It trades about 0.33 of its potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.14 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. FS Credit Opportunities
Performance |
| Timeline |
| Visa Class A |
| FS Credit Opportunities |
Visa and FS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FS Credit
The main advantage of trading using opposite Visa and FS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, FS Credit 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 FS Credit will offset losses from the drop in FS Credit's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| FS Credit vs. MFS Investment Grade | FS Credit vs. Invesco High Income | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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