Correlation Between Visa and Payfare
Can any of the company-specific risk be diversified away by investing in both Visa and Payfare 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 Payfare 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 Payfare, you can compare the effects of market volatilities on Visa and Payfare 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 Payfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Payfare.
Diversification Opportunities for Visa and Payfare
Very good diversification
The 3 months correlation between Visa and Payfare is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare 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 Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of Visa i.e., Visa and Payfare go up and down completely randomly.
Pair Corralation between Visa and Payfare
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than Payfare. However, Visa Class A is 1.35 times less risky than Payfare. It trades about 0.34 of its potential returns per unit of risk. Payfare is currently generating about -0.03 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Payfare
Performance |
| Timeline |
| Visa Class A |
| Payfare |
Visa and Payfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Payfare
The main advantage of trading using opposite Visa and Payfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Payfare 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 Payfare will offset losses from the drop in Payfare's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Payfare vs. Priority Technology Holdings | Payfare vs. Repay Holdings Corp | Payfare vs. Radware | Payfare vs. Global Blue 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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