Correlation Between Visa and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Annaly Capital 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 Annaly Capital 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 Annaly Capital Management, you can compare the effects of market volatilities on Visa and Annaly Capital 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 Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Annaly Capital.
Diversification Opportunities for Visa and Annaly Capital
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Annaly is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Visa i.e., Visa and Annaly Capital go up and down completely randomly.
Pair Corralation between Visa and Annaly Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.69 times more return on investment than Annaly Capital. However, Visa is 3.69 times more volatile than Annaly Capital Management. It trades about 0.11 of its potential returns per unit of risk. Annaly Capital Management is currently generating about 0.12 per unit of risk. If you would invest 26,932 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Annaly Capital Management
Performance |
| Timeline |
| Visa Class A |
| Annaly Capital Management |
Visa and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Annaly Capital
The main advantage of trading using opposite Visa and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Annaly Capital vs. Annaly Capital Management | Annaly Capital vs. Annaly Capital Management | Annaly Capital vs. AGNC Investment Corp | Annaly Capital vs. AGNC Investment Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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