Correlation Between Visa and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Visa and Matthews Asia 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 Matthews Asia 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 Matthews Asia Growth, you can compare the effects of market volatilities on Visa and Matthews Asia 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 Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Matthews Asia.
Diversification Opportunities for Visa and Matthews Asia
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Matthews is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Matthews Asia Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Growth 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 Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Growth has no effect on the direction of Visa i.e., Visa and Matthews Asia go up and down completely randomly.
Pair Corralation between Visa and Matthews Asia
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.01 times more return on investment than Matthews Asia. However, Visa is 1.01 times more volatile than Matthews Asia Growth. It trades about 0.1 of its potential returns per unit of risk. Matthews Asia Growth is currently generating about 0.03 per unit of risk. If you would invest 21,882 in Visa Class A on November 27, 2024 and sell it today you would earn a total of 12,971 from holding Visa Class A or generate 59.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Matthews Asia Growth
Performance |
| Timeline |
| Visa Class A |
| Matthews Asia Growth |
Visa and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Matthews Asia
The main advantage of trading using opposite Visa and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Matthews Asia 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 Matthews Asia will offset losses from the drop in Matthews Asia's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Matthews Asia vs. Matthews Asia Innovators | Matthews Asia vs. Matthews Japan Fund | Matthews Asia vs. Matthews Pacific Tiger | Matthews Asia vs. Matthews Asian Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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