Correlation Between Visa and Manitowoc
Can any of the company-specific risk be diversified away by investing in both Visa and Manitowoc 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 Manitowoc 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 Manitowoc, you can compare the effects of market volatilities on Visa and Manitowoc 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 Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Manitowoc.
Diversification Opportunities for Visa and Manitowoc
Good diversification
The 3 months correlation between Visa and Manitowoc is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Visa i.e., Visa and Manitowoc go up and down completely randomly.
Pair Corralation between Visa and Manitowoc
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.32 times more return on investment than Manitowoc. However, Visa Class A is 3.12 times less risky than Manitowoc. It trades about 0.27 of its potential returns per unit of risk. Manitowoc is currently generating about 0.08 per unit of risk. If you would invest 29,018 in Visa Class A on November 1, 2024 and sell it today you would earn a total of 5,287 from holding Visa Class A or generate 18.22% 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. Manitowoc
Performance |
| Timeline |
| Visa Class A |
| Manitowoc |
Visa and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Manitowoc
The main advantage of trading using opposite Visa and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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