Correlation Between Visa and Novan
Can any of the company-specific risk be diversified away by investing in both Visa and Novan 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 Novan 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 Novan Inc, you can compare the effects of market volatilities on Visa and Novan 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 Novan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Novan.
Diversification Opportunities for Visa and Novan
Pay attention - limited upside
The 3 months correlation between Visa and Novan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Novan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novan Inc 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 Novan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novan Inc has no effect on the direction of Visa i.e., Visa and Novan go up and down completely randomly.
Pair Corralation between Visa and Novan
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.12 times more return on investment than Novan. However, Visa Class A is 8.66 times less risky than Novan. It trades about 0.08 of its potential returns per unit of risk. Novan Inc is currently generating about -0.11 per unit of risk. If you would invest 21,128 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 10,342 from holding Visa Class A or generate 48.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 31.11% |
| Values | Daily Returns |
Visa Class A vs. Novan Inc
Performance |
| Timeline |
| Visa Class A |
| Novan Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Novan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Novan
The main advantage of trading using opposite Visa and Novan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Novan 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 Novan will offset losses from the drop in Novan's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Novan vs. Tarsus Pharmaceuticals | Novan vs. Aldeyra | Novan vs. Travere Therapeutics | Novan vs. Eton Pharmaceuticals |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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