Correlation Between Visa and Hennessy Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Hennessy Capital 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 Hennessy Capital 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 Hennessy Capital Investment, you can compare the effects of market volatilities on Visa and Hennessy Capital 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 Hennessy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hennessy Capital.
Diversification Opportunities for Visa and Hennessy Capital
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Hennessy is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv 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 Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Visa i.e., Visa and Hennessy Capital go up and down completely randomly.
Pair Corralation between Visa and Hennessy Capital
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Hennessy Capital. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 3.7 times less risky than Hennessy Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Hennessy Capital Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Hennessy Capital Investment on January 11, 2025 and sell it today you would lose (75.00) from holding Hennessy Capital Investment or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Hennessy Capital Investment
Performance |
| Timeline |
| Visa Class A |
| Hennessy Capital Inv |
Visa and Hennessy Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hennessy Capital
The main advantage of trading using opposite Visa and Hennessy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Hennessy Capital 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 Hennessy Capital will offset losses from the drop in Hennessy Capital's 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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