Correlation Between Visa and Rocket Companies
Can any of the company-specific risk be diversified away by investing in both Visa and Rocket Companies 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 Rocket Companies 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 Rocket Companies, you can compare the effects of market volatilities on Visa and Rocket Companies 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 Rocket Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Rocket Companies.
Diversification Opportunities for Visa and Rocket Companies
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Rocket is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies 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 Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Visa i.e., Visa and Rocket Companies go up and down completely randomly.
Pair Corralation between Visa and Rocket Companies
Taking into account the 90-day investment horizon Visa is expected to generate 1.7 times less return on investment than Rocket Companies. But when comparing it to its historical volatility, Visa Class A is 3.0 times less risky than Rocket Companies. It trades about 0.09 of its potential returns per unit of risk. Rocket Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 826.00 in Rocket Companies on August 27, 2024 and sell it today you would earn a total of 548.00 from holding Rocket Companies or generate 66.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Rocket Companies
Performance |
| Timeline |
| Visa Class A |
| Rocket Companies |
Visa and Rocket Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Rocket Companies
The main advantage of trading using opposite Visa and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Rocket Companies 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 Rocket Companies will offset losses from the drop in Rocket Companies' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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