Correlation Between Visa and Henderson Global
Can any of the company-specific risk be diversified away by investing in both Visa and Henderson Global 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 Henderson Global 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 Henderson Global Equity, you can compare the effects of market volatilities on Visa and Henderson Global 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 Henderson Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Henderson Global.
Diversification Opportunities for Visa and Henderson Global
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Henderson is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Henderson Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Global Equity 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 Henderson Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Global Equity has no effect on the direction of Visa i.e., Visa and Henderson Global go up and down completely randomly.
Pair Corralation between Visa and Henderson Global
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.53 times more return on investment than Henderson Global. However, Visa is 1.53 times more volatile than Henderson Global Equity. It trades about 0.08 of its potential returns per unit of risk. Henderson Global Equity is currently generating about 0.06 per unit of risk. If you would invest 22,626 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 8,882 from holding Visa Class A or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Visa Class A vs. Henderson Global Equity
Performance |
| Timeline |
| Visa Class A |
| Henderson Global Equity |
Visa and Henderson Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Henderson Global
The main advantage of trading using opposite Visa and Henderson Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Henderson Global 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 Henderson Global will offset losses from the drop in Henderson Global's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Henderson Global vs. Henderson Global Equity | Henderson Global vs. Thornburg Investment Income | Henderson Global vs. Aquagold International | Henderson Global vs. Thrivent High Yield |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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