Correlation Between Visa and Oxford Bank
Can any of the company-specific risk be diversified away by investing in both Visa and Oxford 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 Oxford 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 Oxford Bank, you can compare the effects of market volatilities on Visa and Oxford 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 Oxford Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Oxford Bank.
Diversification Opportunities for Visa and Oxford Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Oxford is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Oxford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford 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 Oxford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Bank has no effect on the direction of Visa i.e., Visa and Oxford Bank go up and down completely randomly.
Pair Corralation between Visa and Oxford Bank
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.92 times more return on investment than Oxford Bank. However, Visa is 1.92 times more volatile than Oxford Bank. It trades about 0.27 of its potential returns per unit of risk. Oxford Bank is currently generating about 0.12 per unit of risk. If you would invest 27,464 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 3,718 from holding Visa Class A or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Oxford Bank
Performance |
| Timeline |
| Visa Class A |
| Oxford Bank |
Visa and Oxford Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Oxford Bank
The main advantage of trading using opposite Visa and Oxford Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Oxford 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 Oxford Bank will offset losses from the drop in Oxford Bank's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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