Correlation Between Visa and Performance Trust
Can any of the company-specific risk be diversified away by investing in both Visa and Performance Trust 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 Performance Trust 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 Performance Trust Municipal, you can compare the effects of market volatilities on Visa and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Performance Trust.
Diversification Opportunities for Visa and Performance Trust
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Performance is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Performance Trust Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Visa i.e., Visa and Performance Trust go up and down completely randomly.
Pair Corralation between Visa and Performance Trust
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.53 times more return on investment than Performance Trust. However, Visa is 3.53 times more volatile than Performance Trust Municipal. It trades about 0.44 of its potential returns per unit of risk. Performance Trust Municipal is currently generating about -0.04 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Performance Trust Municipal
Performance |
| Timeline |
| Visa Class A |
| Performance Trust |
Visa and Performance Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Performance Trust
The main advantage of trading using opposite Visa and Performance Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Performance Trust 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 Performance Trust will offset losses from the drop in Performance Trust's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Performance Trust vs. Performance Trust Strategic | Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Sierra Strategic Income | Performance Trust vs. Nuveen High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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