Correlation Between Visa and Needham Small
Can any of the company-specific risk be diversified away by investing in both Visa and Needham Small 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 Needham Small 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 Needham Small Cap, you can compare the effects of market volatilities on Visa and Needham Small 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 Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Needham Small.
Diversification Opportunities for Visa and Needham Small
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Needham is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap 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 Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Visa i.e., Visa and Needham Small go up and down completely randomly.
Pair Corralation between Visa and Needham Small
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.72 times more return on investment than Needham Small. However, Visa Class A is 1.4 times less risky than Needham Small. It trades about 0.35 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.23 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Needham Small Cap
Performance |
| Timeline |
| Visa Class A |
| Needham Small Cap |
Visa and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Needham Small
The main advantage of trading using opposite Visa and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Needham Small 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 Needham Small will offset losses from the drop in Needham Small's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Needham Small vs. Needham Small Cap | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Ultramid Cap Profund Ultramid Cap |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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