Correlation Between Visa and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Visa and Medical Properties 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 Medical Properties 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 Medical Properties Trust, you can compare the effects of market volatilities on Visa and Medical Properties 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 Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Medical Properties.
Diversification Opportunities for Visa and Medical Properties
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Medical is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Visa i.e., Visa and Medical Properties go up and down completely randomly.
Pair Corralation between Visa and Medical Properties
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Medical Properties. However, Visa Class A is 2.4 times less risky than Medical Properties. It trades about 0.1 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.1 per unit of risk. If you would invest 28,793 in Visa Class A on October 18, 2024 and sell it today you would earn a total of 2,835 from holding Visa Class A or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Visa Class A vs. Medical Properties Trust
Performance |
| Timeline |
| Visa Class A |
| Medical Properties Trust |
Visa and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Medical Properties
The main advantage of trading using opposite Visa and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Medical Properties vs. Apple Inc | Medical Properties vs. Apple Inc | Medical Properties vs. Apple Inc | Medical Properties vs. Apple Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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