Correlation Between Visa and New Nordic
Can any of the company-specific risk be diversified away by investing in both Visa and New Nordic 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 New Nordic 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 New Nordic Healthbrands, you can compare the effects of market volatilities on Visa and New Nordic 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 New Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and New Nordic.
Diversification Opportunities for Visa and New Nordic
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and New is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands 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 New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Visa i.e., Visa and New Nordic go up and down completely randomly.
Pair Corralation between Visa and New Nordic
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than New Nordic. However, Visa Class A is 2.02 times less risky than New Nordic. It trades about 0.35 of its potential returns per unit of risk. New Nordic Healthbrands is currently generating about -0.17 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 Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. New Nordic Healthbrands
Performance |
| Timeline |
| Visa Class A |
| New Nordic Healthbrands |
Visa and New Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and New Nordic
The main advantage of trading using opposite Visa and New Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, New Nordic 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 New Nordic will offset losses from the drop in New Nordic's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| New Nordic vs. Stille AB | New Nordic vs. Midsona AB | New Nordic vs. Precio Fishbone AB | New Nordic vs. C Rad AB |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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