Correlation Between Visa and Light Science
Can any of the company-specific risk be diversified away by investing in both Visa and Light Science 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 Light Science 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 Light Science Technologies, you can compare the effects of market volatilities on Visa and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Light Science.
Diversification Opportunities for Visa and Light Science
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Light is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Visa i.e., Visa and Light Science go up and down completely randomly.
Pair Corralation between Visa and Light Science
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.33 times more return on investment than Light Science. However, Visa Class A is 3.06 times less risky than Light Science. It trades about 0.12 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.24 per unit of risk. If you would invest 31,722 in Visa Class A on October 24, 2024 and sell it today you would earn a total of 634.00 from holding Visa Class A or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Visa Class A vs. Light Science Technologies
Performance |
| Timeline |
| Visa Class A |
| Light Science Techno |
Visa and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Light Science
The main advantage of trading using opposite Visa and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Light Science vs. Global Net Lease | Light Science vs. Solstad Offshore ASA | Light Science vs. Host Hotels Resorts | Light Science vs. Ecofin Global Utilities |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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