Correlation Between Visa and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Visa and Medibank Private 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 Medibank Private 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 Medibank Private, you can compare the effects of market volatilities on Visa and Medibank Private 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 Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Medibank Private.
Diversification Opportunities for Visa and Medibank Private
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Medibank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private 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 Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Visa i.e., Visa and Medibank Private go up and down completely randomly.
Pair Corralation between Visa and Medibank Private
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.85 times more return on investment than Medibank Private. However, Visa Class A is 1.17 times less risky than Medibank Private. It trades about 0.09 of its potential returns per unit of risk. Medibank Private is currently generating about 0.06 per unit of risk. If you would invest 20,266 in Visa Class A on September 13, 2024 and sell it today you would earn a total of 11,157 from holding Visa Class A or generate 55.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Visa Class A vs. Medibank Private
Performance |
| Timeline |
| Visa Class A |
| Medibank Private |
Visa and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Medibank Private
The main advantage of trading using opposite Visa and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Medibank Private vs. Westpac Banking | Medibank Private vs. National Australia Bank | Medibank Private vs. National Australia Bank | Medibank Private vs. National Australia Bank |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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