Correlation Between Visa and Midland States
Can any of the company-specific risk be diversified away by investing in both Visa and Midland States 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 Midland States 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 Midland States Bancorp, you can compare the effects of market volatilities on Visa and Midland States 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 Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Midland States.
Diversification Opportunities for Visa and Midland States
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Midland is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States Bancorp 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 Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of Visa i.e., Visa and Midland States go up and down completely randomly.
Pair Corralation between Visa and Midland States
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.76 times more return on investment than Midland States. However, Visa is 2.76 times more volatile than Midland States Bancorp. It trades about 0.34 of its potential returns per unit of risk. Midland States Bancorp is currently generating about 0.15 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Midland States Bancorp
Performance |
| Timeline |
| Visa Class A |
| Midland States Bancorp |
Visa and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Midland States
The main advantage of trading using opposite Visa and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Midland States vs. Fifth Third Bancorp | Midland States vs. Huntington Bancshares Incorporated | Midland States vs. MT 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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