Correlation Between Visa and NOVA VISION
Can any of the company-specific risk be diversified away by investing in both Visa and NOVA VISION 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 NOVA VISION 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 NOVA VISION ACQUISITION, you can compare the effects of market volatilities on Visa and NOVA VISION 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 NOVA VISION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and NOVA VISION.
Diversification Opportunities for Visa and NOVA VISION
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and NOVA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and NOVA VISION ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVA VISION ACQUISITION 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 NOVA VISION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVA VISION ACQUISITION has no effect on the direction of Visa i.e., Visa and NOVA VISION go up and down completely randomly.
Pair Corralation between Visa and NOVA VISION
Taking into account the 90-day investment horizon Visa is expected to generate 6.09 times less return on investment than NOVA VISION. But when comparing it to its historical volatility, Visa Class A is 9.29 times less risky than NOVA VISION. It trades about 0.08 of its potential returns per unit of risk. NOVA VISION ACQUISITION is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,062 in NOVA VISION ACQUISITION on October 25, 2024 and sell it today you would earn a total of 2,638 from holding NOVA VISION ACQUISITION or generate 248.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.1% |
| Values | Daily Returns |
Visa Class A vs. NOVA VISION ACQUISITION
Performance |
| Timeline |
| Visa Class A |
| NOVA VISION ACQUISITION |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and NOVA VISION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and NOVA VISION
The main advantage of trading using opposite Visa and NOVA VISION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, NOVA VISION 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 NOVA VISION will offset losses from the drop in NOVA VISION's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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