Correlation Between Visa and General Mills
Can any of the company-specific risk be diversified away by investing in both Visa and General Mills 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 General Mills 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 General Mills, you can compare the effects of market volatilities on Visa and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and General Mills.
Diversification Opportunities for Visa and General Mills
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and General is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Visa i.e., Visa and General Mills go up and down completely randomly.
Pair Corralation between Visa and General Mills
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.68 times more return on investment than General Mills. However, Visa Class A is 1.47 times less risky than General Mills. It trades about 0.1 of its potential returns per unit of risk. General Mills is currently generating about 0.05 per unit of risk. If you would invest 22,355 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 9,153 from holding Visa Class A or generate 40.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.89% |
| Values | Daily Returns |
Visa Class A vs. General Mills
Performance |
| Timeline |
| Visa Class A |
| General Mills |
Visa and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and General Mills
The main advantage of trading using opposite Visa and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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