Correlation Between Visa and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both Visa and MidCap Financial 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 MidCap Financial 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 MidCap Financial Investment, you can compare the effects of market volatilities on Visa and MidCap Financial 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 MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and MidCap Financial.
Diversification Opportunities for Visa and MidCap Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and MidCap is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv 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 MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of Visa i.e., Visa and MidCap Financial go up and down completely randomly.
Pair Corralation between Visa and MidCap Financial
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.37 times more return on investment than MidCap Financial. However, Visa is 1.37 times more volatile than MidCap Financial Investment. It trades about 0.33 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.43 per unit of risk. If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. MidCap Financial Investment
Performance |
| Timeline |
| Visa Class A |
| MidCap Financial Inv |
Visa and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and MidCap Financial
The main advantage of trading using opposite Visa and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, MidCap Financial 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 MidCap Financial will offset losses from the drop in MidCap Financial's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| MidCap Financial vs. Federated Premier Municipal | MidCap Financial vs. Blackrock Muniyield | MidCap Financial vs. Federated Investors B | MidCap Financial vs. SEI Investments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |