Correlation Between Visa and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Visa and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Visa and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Growth Strategy.
Diversification Opportunities for Visa and Growth Strategy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Growth is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Visa i.e., Visa and Growth Strategy go up and down completely randomly.
Pair Corralation between Visa and Growth Strategy
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.55 times more return on investment than Growth Strategy. However, Visa is 1.55 times more volatile than Growth Strategy Fund. It trades about 0.09 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.07 per unit of risk. If you would invest 20,588 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 10,882 from holding Visa Class A or generate 52.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Growth Strategy Fund
Performance |
| Timeline |
| Visa Class A |
| Growth Strategy |
Visa and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Growth Strategy
The main advantage of trading using opposite Visa and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Growth Strategy vs. Needham Aggressive Growth | Growth Strategy vs. Morningstar Aggressive Growth | Growth Strategy vs. Ab High Income | Growth Strategy vs. Copeland Risk Managed |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |