Correlation Between Visa and The Hartford
Can any of the company-specific risk be diversified away by investing in both Visa and The Hartford 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 The Hartford 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 The Hartford Midcap, you can compare the effects of market volatilities on Visa and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and The Hartford.
Diversification Opportunities for Visa and The Hartford
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and The is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of Visa i.e., Visa and The Hartford go up and down completely randomly.
Pair Corralation between Visa and The Hartford
Taking into account the 90-day investment horizon Visa is expected to generate 1.17 times less return on investment than The Hartford. In addition to that, Visa is 1.19 times more volatile than The Hartford Midcap. It trades about 0.34 of its total potential returns per unit of risk. The Hartford Midcap is currently generating about 0.47 per unit of volatility. If you would invest 2,818 in The Hartford Midcap on September 2, 2024 and sell it today you would earn a total of 287.00 from holding The Hartford Midcap or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. The Hartford Midcap
Performance |
| Timeline |
| Visa Class A |
| Hartford Midcap |
Visa and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and The Hartford
The main advantage of trading using opposite Visa and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| The Hartford vs. Hennessy Nerstone Mid | The Hartford vs. Lord Abbett Small | The Hartford vs. Royce Opportunity Fund | The Hartford vs. Amg River Road |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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