Correlation Between Visa and Leslies
Can any of the company-specific risk be diversified away by investing in both Visa and Leslies 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 Leslies 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 Leslies, you can compare the effects of market volatilities on Visa and Leslies 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 Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Leslies.
Diversification Opportunities for Visa and Leslies
Excellent diversification
The 3 months correlation between Visa and Leslies is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Visa i.e., Visa and Leslies go up and down completely randomly.
Pair Corralation between Visa and Leslies
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.19 times more return on investment than Leslies. However, Visa Class A is 5.29 times less risky than Leslies. It trades about 0.1 of its potential returns per unit of risk. Leslies is currently generating about -0.04 per unit of risk. If you would invest 26,322 in Visa Class A on November 9, 2024 and sell it today you would earn a total of 8,426 from holding Visa Class A or generate 32.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Leslies
Performance |
| Timeline |
| Visa Class A |
| Leslies |
Visa and Leslies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Leslies
The main advantage of trading using opposite Visa and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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