Correlation Between Visa and IAC
Can any of the company-specific risk be diversified away by investing in both Visa and IAC 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 IAC 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 IAC Inc, you can compare the effects of market volatilities on Visa and IAC 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 IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IAC.
Diversification Opportunities for Visa and IAC
Very weak diversification
The 3 months correlation between Visa and IAC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc 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 IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Visa i.e., Visa and IAC go up and down completely randomly.
Pair Corralation between Visa and IAC
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the IAC. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.73 times less risky than IAC. The stock trades about -0.21 of its potential returns per unit of risk. The IAC Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,718 in IAC Inc on January 4, 2025 and sell it today you would lose (42.00) from holding IAC Inc or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. IAC Inc
Performance |
| Timeline |
| Visa Class A |
| IAC Inc |
Visa and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IAC
The main advantage of trading using opposite Visa and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC'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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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