Correlation Between Visa and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Visa and Sonic Healthcare 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 Sonic Healthcare 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 Sonic Healthcare Limited, you can compare the effects of market volatilities on Visa and Sonic Healthcare 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 Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sonic Healthcare.
Diversification Opportunities for Visa and Sonic Healthcare
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Sonic is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare 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 Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Visa i.e., Visa and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Visa and Sonic Healthcare
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Sonic Healthcare. In addition to that, Visa is 1.35 times more volatile than Sonic Healthcare Limited. It trades about -0.19 of its total potential returns per unit of risk. Sonic Healthcare Limited is currently generating about -0.15 per unit of volatility. If you would invest 1,650 in Sonic Healthcare Limited on January 5, 2025 and sell it today you would lose (90.00) from holding Sonic Healthcare Limited or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Sonic Healthcare Limited
Performance |
| Timeline |
| Visa Class A |
| Sonic Healthcare |
Visa and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sonic Healthcare
The main advantage of trading using opposite Visa and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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