Correlation Between Visa and Marex Group
Can any of the company-specific risk be diversified away by investing in both Visa and Marex Group 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 Marex Group 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 Marex Group plc, you can compare the effects of market volatilities on Visa and Marex Group 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 Marex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Marex Group.
Diversification Opportunities for Visa and Marex Group
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Visa and Marex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Visa i.e., Visa and Marex Group go up and down completely randomly.
Pair Corralation between Visa and Marex Group
Taking into account the 90-day investment horizon Visa is expected to generate 1.19 times less return on investment than Marex Group. But when comparing it to its historical volatility, Visa Class A is 1.34 times less risky than Marex Group. It trades about 0.33 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,642 in Marex Group plc on August 31, 2024 and sell it today you would earn a total of 273.00 from holding Marex Group plc or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Marex Group plc
Performance |
| Timeline |
| Visa Class A |
| Marex Group plc |
Visa and Marex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Marex Group
The main advantage of trading using opposite Visa and Marex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Marex Group 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 Marex Group will offset losses from the drop in Marex Group's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Marex Group vs. LB Foster | Marex Group vs. Pool Corporation | Marex Group vs. Cardinal Health | Marex Group vs. Amkor Technology |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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