Correlation Between Visa and CPI Card
Can any of the company-specific risk be diversified away by investing in both Visa and CPI Card 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 CPI Card 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 CPI Card Group, you can compare the effects of market volatilities on Visa and CPI Card 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 CPI Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CPI Card.
Diversification Opportunities for Visa and CPI Card
Average diversification
The 3 months correlation between Visa and CPI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CPI Card Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Card 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 CPI Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Card Group has no effect on the direction of Visa i.e., Visa and CPI Card go up and down completely randomly.
Pair Corralation between Visa and CPI Card
Taking into account the 90-day investment horizon Visa is expected to generate 2.63 times less return on investment than CPI Card. But when comparing it to its historical volatility, Visa Class A is 2.83 times less risky than CPI Card. It trades about 0.33 of its potential returns per unit of risk. CPI Card Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,380 in CPI Card Group on August 27, 2024 and sell it today you would earn a total of 595.00 from holding CPI Card Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. CPI Card Group
Performance |
| Timeline |
| Visa Class A |
| CPI Card Group |
Visa and CPI Card Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CPI Card
The main advantage of trading using opposite Visa and CPI Card positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CPI Card 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 CPI Card will offset losses from the drop in CPI Card's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| CPI Card vs. FirstCash | CPI Card vs. Runway Growth Finance | CPI Card vs. Credit Acceptance | CPI Card vs. SLM 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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