Correlation Between Visa and National Bank
Can any of the company-specific risk be diversified away by investing in both Visa and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on Visa and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and National Bank.
Diversification Opportunities for Visa and National Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and National is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Visa i.e., Visa and National Bank go up and down completely randomly.
Pair Corralation between Visa and National Bank
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.85 times more return on investment than National Bank. However, Visa is 1.85 times more volatile than National Bank of. It trades about 0.34 of its potential returns per unit of risk. National Bank of is currently generating about 0.34 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. National Bank of
Performance |
| Timeline |
| Visa Class A |
| National Bank |
Visa and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and National Bank
The main advantage of trading using opposite Visa and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| National Bank vs. HUMANA INC | National Bank vs. SCOR PK | National Bank vs. Aquagold International | National Bank vs. Thrivent High Yield |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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