Correlation Between Visa and Rand Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Rand Capital 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 Rand Capital 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 Rand Capital Corp, you can compare the effects of market volatilities on Visa and Rand Capital 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 Rand Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Rand Capital.
Diversification Opportunities for Visa and Rand Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Rand is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Visa i.e., Visa and Rand Capital go up and down completely randomly.
Pair Corralation between Visa and Rand Capital
Taking into account the 90-day investment horizon Visa is expected to generate 1.83 times less return on investment than Rand Capital. But when comparing it to its historical volatility, Visa Class A is 2.17 times less risky than Rand Capital. It trades about 0.09 of its potential returns per unit of risk. Rand Capital Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,167 in Rand Capital Corp on August 24, 2024 and sell it today you would earn a total of 466.45 from holding Rand Capital Corp or generate 39.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.59% |
| Values | Daily Returns |
Visa Class A vs. Rand Capital Corp
Performance |
| Timeline |
| Visa Class A |
| Rand Capital Corp |
Visa and Rand Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Rand Capital
The main advantage of trading using opposite Visa and Rand Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Rand Capital 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 Rand Capital will offset losses from the drop in Rand Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Rand Capital vs. Blackstone Gso Long | Rand Capital vs. First Trust Senior | Rand Capital vs. Eaton Vance Senior | Rand Capital vs. Princeton Capital |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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