Correlation Between Visa and Matson
Can any of the company-specific risk be diversified away by investing in both Visa and Matson 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 Matson 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 Matson Inc, you can compare the effects of market volatilities on Visa and Matson 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 Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Matson.
Diversification Opportunities for Visa and Matson
Modest diversification
The 3 months correlation between Visa and Matson is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson 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 Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Visa i.e., Visa and Matson go up and down completely randomly.
Pair Corralation between Visa and Matson
Taking into account the 90-day investment horizon Visa is expected to generate 2.02 times less return on investment than Matson. But when comparing it to its historical volatility, Visa Class A is 1.97 times less risky than Matson. It trades about 0.06 of its potential returns per unit of risk. Matson Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,115 in Matson Inc on January 8, 2025 and sell it today you would earn a total of 4,789 from holding Matson Inc or generate 78.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Matson Inc
Performance |
| Timeline |
| Visa Class A |
| Matson Inc |
Visa and Matson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Matson
The main advantage of trading using opposite Visa and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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