Correlation Between Visa and Mainstay Nerstone
Can any of the company-specific risk be diversified away by investing in both Visa and Mainstay Nerstone 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 Mainstay Nerstone 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 Mainstay Nerstone Growth, you can compare the effects of market volatilities on Visa and Mainstay Nerstone 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 Mainstay Nerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mainstay Nerstone.
Diversification Opportunities for Visa and Mainstay Nerstone
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Mainstay is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mainstay Nerstone Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Nerstone Growth 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 Mainstay Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Nerstone Growth has no effect on the direction of Visa i.e., Visa and Mainstay Nerstone go up and down completely randomly.
Pair Corralation between Visa and Mainstay Nerstone
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.02 times more return on investment than Mainstay Nerstone. However, Visa is 1.02 times more volatile than Mainstay Nerstone Growth. It trades about 0.33 of its potential returns per unit of risk. Mainstay Nerstone Growth is currently generating about 0.07 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% 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. Mainstay Nerstone Growth
Performance |
| Timeline |
| Visa Class A |
| Mainstay Nerstone Growth |
Visa and Mainstay Nerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Mainstay Nerstone
The main advantage of trading using opposite Visa and Mainstay Nerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Mainstay Nerstone 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 Mainstay Nerstone will offset losses from the drop in Mainstay Nerstone's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Mainstay Nerstone vs. Financials Ultrasector Profund | Mainstay Nerstone vs. Icon Financial Fund | Mainstay Nerstone vs. Blackrock Financial Institutions | Mainstay Nerstone vs. Royce Global Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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