Correlation Between Visa and GP Act
Can any of the company-specific risk be diversified away by investing in both Visa and GP Act 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 GP Act 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 GP Act III Acquisition, you can compare the effects of market volatilities on Visa and GP Act 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 GP Act. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and GP Act.
Diversification Opportunities for Visa and GP Act
Very weak diversification
The 3 months correlation between Visa and GPAT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and GP Act III Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Act III 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 GP Act. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Act III has no effect on the direction of Visa i.e., Visa and GP Act go up and down completely randomly.
Pair Corralation between Visa and GP Act
Taking into account the 90-day investment horizon Visa Class A is expected to generate 8.76 times more return on investment than GP Act. However, Visa is 8.76 times more volatile than GP Act III Acquisition. It trades about 0.09 of its potential returns per unit of risk. GP Act III Acquisition is currently generating about 0.11 per unit of risk. If you would invest 20,311 in Visa Class A on September 14, 2024 and sell it today you would earn a total of 11,272 from holding Visa Class A or generate 55.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.23% |
| Values | Daily Returns |
Visa Class A vs. GP Act III Acquisition
Performance |
| Timeline |
| Visa Class A |
| GP Act III |
Visa and GP Act Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and GP Act
The main advantage of trading using opposite Visa and GP Act positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, GP Act 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 GP Act will offset losses from the drop in GP Act's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| GP Act vs. HF Sinclair Corp | GP Act vs. Finnair Oyj | GP Act vs. United States Steel | GP Act vs. AerSale Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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