Correlation Between Visa and New You
Can any of the company-specific risk be diversified away by investing in both Visa and New You 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 You 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 You, you can compare the effects of market volatilities on Visa and New You 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 You. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and New You.
Diversification Opportunities for Visa and New You
Pay attention - limited upside
The 3 months correlation between Visa and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and New You in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New You 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 You. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New You has no effect on the direction of Visa i.e., Visa and New You go up and down completely randomly.
Pair Corralation between Visa and New You
Taking into account the 90-day investment horizon Visa is expected to generate 3.8 times less return on investment than New You. But when comparing it to its historical volatility, Visa Class A is 3.86 times less risky than New You. It trades about 0.08 of its potential returns per unit of risk. New You is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.02 in New You on August 25, 2024 and sell it today you would earn a total of 0.01 from holding New You or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 31.79% |
| Values | Daily Returns |
Visa Class A vs. New You
Performance |
| Timeline |
| Visa Class A |
| New You |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and New You Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and New You
The main advantage of trading using opposite Visa and New You positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, New You 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 You will offset losses from the drop in New You's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| New You vs. OrganiGram Holdings | New You vs. Aurora Cannabis | New You vs. Tilray Inc | New You vs. FutureWorld 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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