Correlation Between Visa and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Visa and Sextant Growth 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 Sextant Growth 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 Sextant Growth Fund, you can compare the effects of market volatilities on Visa and Sextant Growth 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 Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sextant Growth.
Diversification Opportunities for Visa and Sextant Growth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Sextant is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth 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 Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Visa i.e., Visa and Sextant Growth go up and down completely randomly.
Pair Corralation between Visa and Sextant Growth
Taking into account the 90-day investment horizon Visa is expected to generate 1.15 times less return on investment than Sextant Growth. In addition to that, Visa is 1.08 times more volatile than Sextant Growth Fund. It trades about 0.09 of its total potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.11 per unit of volatility. If you would invest 3,528 in Sextant Growth Fund on September 14, 2024 and sell it today you would earn a total of 2,369 from holding Sextant Growth Fund or generate 67.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Class A vs. Sextant Growth Fund
Performance |
| Timeline |
| Visa Class A |
| Sextant Growth |
Visa and Sextant Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sextant Growth
The main advantage of trading using opposite Visa and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sextant Growth 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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