Correlation Between Visa and Peapack Gladstone
Can any of the company-specific risk be diversified away by investing in both Visa and Peapack Gladstone 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 Peapack Gladstone 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 Peapack Gladstone Financial, you can compare the effects of market volatilities on Visa and Peapack Gladstone 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 Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Peapack Gladstone.
Diversification Opportunities for Visa and Peapack Gladstone
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Peapack is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Visa i.e., Visa and Peapack Gladstone go up and down completely randomly.
Pair Corralation between Visa and Peapack Gladstone
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Peapack Gladstone. However, Visa Class A is 2.01 times less risky than Peapack Gladstone. It trades about 0.45 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.05 per unit of risk. If you would invest 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% 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. Peapack Gladstone Financial
Performance |
| Timeline |
| Visa Class A |
| Peapack Gladstone |
Visa and Peapack Gladstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Peapack Gladstone
The main advantage of trading using opposite Visa and Peapack Gladstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Peapack Gladstone 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 Peapack Gladstone will offset losses from the drop in Peapack Gladstone's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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