Correlation Between Visa and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both Visa and PeakShares Sector 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 PeakShares Sector 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 PeakShares Sector Rotation, you can compare the effects of market volatilities on Visa and PeakShares Sector 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 PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and PeakShares Sector.
Diversification Opportunities for Visa and PeakShares Sector
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and PeakShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector 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 PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of Visa i.e., Visa and PeakShares Sector go up and down completely randomly.
Pair Corralation between Visa and PeakShares Sector
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.27 times more return on investment than PeakShares Sector. However, Visa is 1.27 times more volatile than PeakShares Sector Rotation. It trades about 0.35 of its potential returns per unit of risk. PeakShares Sector Rotation is currently generating about 0.23 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. PeakShares Sector Rotation
Performance |
| Timeline |
| Visa Class A |
| PeakShares Sector |
Visa and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and PeakShares Sector
The main advantage of trading using opposite Visa and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| PeakShares Sector vs. Global X SP | PeakShares Sector vs. Amplify CWP Enhanced | PeakShares Sector vs. JPMorgan Equity Premium |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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