Correlation Between Visa and OFS Credit
Can any of the company-specific risk be diversified away by investing in both Visa and OFS Credit 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 OFS Credit 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 OFS Credit, you can compare the effects of market volatilities on Visa and OFS Credit 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 OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and OFS Credit.
Diversification Opportunities for Visa and OFS Credit
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and OFS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit 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 OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Visa i.e., Visa and OFS Credit go up and down completely randomly.
Pair Corralation between Visa and OFS Credit
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.48 times more return on investment than OFS Credit. However, Visa is 1.48 times more volatile than OFS Credit. It trades about 0.08 of its potential returns per unit of risk. OFS Credit is currently generating about 0.06 per unit of risk. If you would invest 21,038 in Visa Class A on August 24, 2024 and sell it today you would earn a total of 9,954 from holding Visa Class A or generate 47.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. OFS Credit
Performance |
| Timeline |
| Visa Class A |
| OFS Credit |
Visa and OFS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and OFS Credit
The main advantage of trading using opposite Visa and OFS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, OFS Credit 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 OFS Credit will offset losses from the drop in OFS Credit's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| OFS Credit vs. Oxford Lane Capital | OFS Credit vs. OFS Credit | OFS Credit vs. XOMA Corporation | OFS Credit vs. HUMANA INC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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