Correlation Between Visa and R1 RCM
Can any of the company-specific risk be diversified away by investing in both Visa and R1 RCM 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 R1 RCM 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 R1 RCM Inc, you can compare the effects of market volatilities on Visa and R1 RCM 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 R1 RCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and R1 RCM.
Diversification Opportunities for Visa and R1 RCM
Poor diversification
The 3 months correlation between Visa and RCM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and R1 RCM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R1 RCM Inc 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 R1 RCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R1 RCM Inc has no effect on the direction of Visa i.e., Visa and R1 RCM go up and down completely randomly.
Pair Corralation between Visa and R1 RCM
Taking into account the 90-day investment horizon Visa Class A is expected to generate 24.76 times more return on investment than R1 RCM. However, Visa is 24.76 times more volatile than R1 RCM Inc. It trades about 0.4 of its potential returns per unit of risk. R1 RCM Inc is currently generating about 0.52 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.57% |
| Values | Daily Returns |
Visa Class A vs. R1 RCM Inc
Performance |
| Timeline |
| Visa Class A |
| R1 RCM Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Visa and R1 RCM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and R1 RCM
The main advantage of trading using opposite Visa and R1 RCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, R1 RCM 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 R1 RCM will offset losses from the drop in R1 RCM's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| R1 RCM vs. National Research Corp | R1 RCM vs. Definitive Healthcare Corp | R1 RCM vs. HealthStream | R1 RCM vs. Evolent Health |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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