Correlation Between Visa and Latch
Can any of the company-specific risk be diversified away by investing in both Visa and Latch 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 Latch 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 Latch Inc, you can compare the effects of market volatilities on Visa and Latch 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 Latch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Latch.
Diversification Opportunities for Visa and Latch
Very poor diversification
The 3 months correlation between Visa and Latch is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Latch Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latch Inc 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 Latch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latch Inc has no effect on the direction of Visa i.e., Visa and Latch go up and down completely randomly.
Pair Corralation between Visa and Latch
If you would invest 25,102 in Visa Class A on August 24, 2024 and sell it today you would earn a total of 5,888 from holding Visa Class A or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.4% |
| Values | Daily Returns |
Visa Class A vs. Latch Inc
Performance |
| Timeline |
| Visa Class A |
| Latch Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Latch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Latch
The main advantage of trading using opposite Visa and Latch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Latch 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 Latch will offset losses from the drop in Latch's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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