Correlation Between Visa and Eagle Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Eagle 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 Eagle 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 Eagle Capital Appreciation, you can compare the effects of market volatilities on Visa and Eagle 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 Eagle Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Eagle Capital.
Diversification Opportunities for Visa and Eagle Capital
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Eagle is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Eagle Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Capital Apprec 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 Eagle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Capital Apprec has no effect on the direction of Visa i.e., Visa and Eagle Capital go up and down completely randomly.
Pair Corralation between Visa and Eagle Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.16 times more return on investment than Eagle Capital. However, Visa is 1.16 times more volatile than Eagle Capital Appreciation. It trades about 0.34 of its potential returns per unit of risk. Eagle Capital Appreciation is currently generating about 0.28 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% 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. Eagle Capital Appreciation
Performance |
| Timeline |
| Visa Class A |
| Eagle Capital Apprec |
Visa and Eagle Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Eagle Capital
The main advantage of trading using opposite Visa and Eagle Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Eagle 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 Eagle Capital will offset losses from the drop in Eagle Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Eagle Capital vs. Chartwell Short Duration | Eagle Capital vs. Carillon Chartwell Short | Eagle Capital vs. Chartwell Short Duration | Eagle Capital vs. Carillon Chartwell Short |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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