Correlation Between Visa and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Visa and Affiliated Managers 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 Affiliated Managers 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 Affiliated Managers Group,, you can compare the effects of market volatilities on Visa and Affiliated Managers 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 Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Affiliated Managers.
Diversification Opportunities for Visa and Affiliated Managers
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Affiliated is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers 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 Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Visa i.e., Visa and Affiliated Managers go up and down completely randomly.
Pair Corralation between Visa and Affiliated Managers
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.84 times more return on investment than Affiliated Managers. However, Visa Class A is 1.2 times less risky than Affiliated Managers. It trades about 0.07 of its potential returns per unit of risk. Affiliated Managers Group, is currently generating about 0.02 per unit of risk. If you would invest 22,590 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 8,402 from holding Visa Class A or generate 37.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Affiliated Managers Group,
Performance |
| Timeline |
| Visa Class A |
| Affiliated Managers |
Visa and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Affiliated Managers
The main advantage of trading using opposite Visa and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Affiliated Managers 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 Affiliated Managers will offset losses from the drop in Affiliated Managers' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Affiliated Managers vs. Affiliated Managers Group | Affiliated Managers vs. Southern Company Series | Affiliated Managers vs. DTE Energy | Affiliated Managers vs. United States Cellular |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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