Correlation Between Visa and MCBC Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and MCBC Holdings 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 MCBC Holdings 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 MCBC Holdings, you can compare the effects of market volatilities on Visa and MCBC Holdings 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 MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and MCBC Holdings.
Diversification Opportunities for Visa and MCBC Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and MCBC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Visa i.e., Visa and MCBC Holdings go up and down completely randomly.
Pair Corralation between Visa and MCBC Holdings
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.45 times more return on investment than MCBC Holdings. However, Visa Class A is 2.24 times less risky than MCBC Holdings. It trades about 0.13 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.11 per unit of risk. If you would invest 31,216 in Visa Class A on September 18, 2024 and sell it today you would earn a total of 614.00 from holding Visa Class A or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. MCBC Holdings
Performance |
| Timeline |
| Visa Class A |
| MCBC Holdings |
Visa and MCBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and MCBC Holdings
The main advantage of trading using opposite Visa and MCBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, MCBC Holdings 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 MCBC Holdings will offset losses from the drop in MCBC Holdings' long position.The idea behind Visa Class A and MCBC Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MCBC Holdings vs. Malibu Boats | MCBC Holdings vs. Onewater Marine | MCBC Holdings vs. Heidrick Struggles International | MCBC Holdings vs. Johnson Outdoors |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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