Correlation Between Visa and Hilltop Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and Hilltop Holdings 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 Hilltop Holdings 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 Hilltop Holdings, you can compare the effects of market volatilities on Visa and Hilltop Holdings 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 Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hilltop Holdings.
Diversification Opportunities for Visa and Hilltop Holdings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Hilltop is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop Holdings 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 Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of Visa i.e., Visa and Hilltop Holdings go up and down completely randomly.
Pair Corralation between Visa and Hilltop Holdings
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.46 times more return on investment than Hilltop Holdings. However, Visa Class A is 2.16 times less risky than Hilltop Holdings. It trades about 0.4 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.06 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Hilltop Holdings
Performance |
| Timeline |
| Visa Class A |
| Hilltop Holdings |
Visa and Hilltop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hilltop Holdings
The main advantage of trading using opposite Visa and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Hilltop Holdings vs. SVB T Corp | Hilltop Holdings vs. First Capital | Hilltop Holdings vs. Pioneer Bankcorp | Hilltop Holdings vs. Liberty Northwest Bancorp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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