Correlation Between Visa and Clearbridge Value
Can any of the company-specific risk be diversified away by investing in both Visa and Clearbridge Value 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 Clearbridge Value 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 Clearbridge Value Trust, you can compare the effects of market volatilities on Visa and Clearbridge Value 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 Clearbridge Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Clearbridge Value.
Diversification Opportunities for Visa and Clearbridge Value
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Clearbridge is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Clearbridge Value Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Value Trust 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 Clearbridge Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Value Trust has no effect on the direction of Visa i.e., Visa and Clearbridge Value go up and down completely randomly.
Pair Corralation between Visa and Clearbridge Value
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.4 times more return on investment than Clearbridge Value. However, Visa is 1.4 times more volatile than Clearbridge Value Trust. It trades about 0.27 of its potential returns per unit of risk. Clearbridge Value Trust is currently generating about 0.19 per unit of risk. If you would invest 27,442 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 3,740 from holding Visa Class A or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Clearbridge Value Trust
Performance |
| Timeline |
| Visa Class A |
| Clearbridge Value Trust |
Visa and Clearbridge Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Clearbridge Value
The main advantage of trading using opposite Visa and Clearbridge Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Clearbridge Value 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 Clearbridge Value will offset losses from the drop in Clearbridge Value's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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