Correlation Between Visa and ProAssurance
Can any of the company-specific risk be diversified away by investing in both Visa and ProAssurance 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 ProAssurance 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 ProAssurance, you can compare the effects of market volatilities on Visa and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ProAssurance.
Diversification Opportunities for Visa and ProAssurance
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and ProAssurance is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Visa i.e., Visa and ProAssurance go up and down completely randomly.
Pair Corralation between Visa and ProAssurance
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.38 times more return on investment than ProAssurance. However, Visa Class A is 2.65 times less risky than ProAssurance. It trades about 0.09 of its potential returns per unit of risk. ProAssurance is currently generating about -0.01 per unit of risk. If you would invest 22,579 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 11,601 from holding Visa Class A or generate 51.38% 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. ProAssurance
Performance |
| Timeline |
| Visa Class A |
| ProAssurance |
Visa and ProAssurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ProAssurance
The main advantage of trading using opposite Visa and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
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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