Correlation Between Visa and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Visa and SLM Corp 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 SLM Corp 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 Sanlam, you can compare the effects of market volatilities on Visa and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SLM Corp.
Diversification Opportunities for Visa and SLM Corp
Very weak diversification
The 3 months correlation between Visa and SLM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sanlam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Visa i.e., Visa and SLM Corp go up and down completely randomly.
Pair Corralation between Visa and SLM Corp
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.5 times more return on investment than SLM Corp. However, Visa is 1.5 times more volatile than Sanlam. It trades about 0.37 of its potential returns per unit of risk. Sanlam is currently generating about -0.07 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Sanlam
Performance |
| Timeline |
| Visa Class A |
| SLM Corp |
Visa and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SLM Corp
The main advantage of trading using opposite Visa and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SLM Corp vs. Old Mutual | SLM Corp vs. Centaur Bci Balanced | SLM Corp vs. Sabvest Capital | SLM Corp vs. Growthpoint Properties |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |