Correlation Between Visa and Inrad Optics
Can any of the company-specific risk be diversified away by investing in both Visa and Inrad Optics 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 Inrad Optics 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 Inrad Optics, you can compare the effects of market volatilities on Visa and Inrad Optics 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 Inrad Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Inrad Optics.
Diversification Opportunities for Visa and Inrad Optics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Inrad is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Inrad Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrad Optics 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 Inrad Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrad Optics has no effect on the direction of Visa i.e., Visa and Inrad Optics go up and down completely randomly.
Pair Corralation between Visa and Inrad Optics
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.2 times more return on investment than Inrad Optics. However, Visa Class A is 4.95 times less risky than Inrad Optics. It trades about 0.09 of its potential returns per unit of risk. Inrad Optics is currently generating about 0.0 per unit of risk. If you would invest 20,586 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 10,406 from holding Visa Class A or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.44% |
| Values | Daily Returns |
Visa Class A vs. Inrad Optics
Performance |
| Timeline |
| Visa Class A |
| Inrad Optics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Inrad Optics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Inrad Optics
The main advantage of trading using opposite Visa and Inrad Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Inrad Optics 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 Inrad Optics will offset losses from the drop in Inrad Optics' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Inrad Optics vs. M tron Industries | Inrad Optics vs. Ieh Corp | Inrad Optics vs. Micropac Industries | Inrad Optics vs. Deswell Industries |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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