Correlation Between Visa and Nissan
Can any of the company-specific risk be diversified away by investing in both Visa and Nissan 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 Nissan 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 Nissan, you can compare the effects of market volatilities on Visa and Nissan 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 Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nissan.
Diversification Opportunities for Visa and Nissan
Poor diversification
The 3 months correlation between Visa and Nissan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nissan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan has no effect on the direction of Visa i.e., Visa and Nissan go up and down completely randomly.
Pair Corralation between Visa and Nissan
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Nissan. However, Visa Class A is 3.33 times less risky than Nissan. It trades about 0.35 of its potential returns per unit of risk. Nissan is currently generating about -0.09 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 | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Visa Class A vs. Nissan
Performance |
| Timeline |
| Visa Class A |
| Nissan |
Visa and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Nissan
The main advantage of trading using opposite Visa and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Nissan vs. Bezeq Israeli Telecommunication | Nissan vs. Brainsway | Nissan vs. Mivne Real Estate | Nissan vs. Photomyne |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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