Correlation Between Visa and Oaktree Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Oaktree Capital 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 Oaktree Capital 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 Oaktree Capital Group, you can compare the effects of market volatilities on Visa and Oaktree Capital 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 Oaktree Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Oaktree Capital.
Diversification Opportunities for Visa and Oaktree Capital
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Oaktree is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Oaktree Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Capital Group 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 Oaktree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Capital Group has no effect on the direction of Visa i.e., Visa and Oaktree Capital go up and down completely randomly.
Pair Corralation between Visa and Oaktree Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.89 times more return on investment than Oaktree Capital. However, Visa Class A is 1.13 times less risky than Oaktree Capital. It trades about 0.56 of its potential returns per unit of risk. Oaktree Capital Group is currently generating about 0.14 per unit of risk. If you would invest 31,260 in Visa Class A on November 9, 2024 and sell it today you would earn a total of 3,488 from holding Visa Class A or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Oaktree Capital Group
Performance |
| Timeline |
| Visa Class A |
| Oaktree Capital Group |
Visa and Oaktree Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Oaktree Capital
The main advantage of trading using opposite Visa and Oaktree Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Oaktree Capital 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 Oaktree Capital will offset losses from the drop in Oaktree Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Oaktree Capital vs. The Gabelli Multimedia | Oaktree Capital vs. The Gabelli Equity | Oaktree Capital vs. Virtus AllianzGI Convertible | Oaktree Capital vs. Tri Continental PFD |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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