Correlation Between Visa and Simply Good
Can any of the company-specific risk be diversified away by investing in both Visa and Simply Good 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 Simply Good 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 Simply Good Foods, you can compare the effects of market volatilities on Visa and Simply Good 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 Simply Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Simply Good.
Diversification Opportunities for Visa and Simply Good
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Simply is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Visa i.e., Visa and Simply Good go up and down completely randomly.
Pair Corralation between Visa and Simply Good
Taking into account the 90-day investment horizon Visa is expected to generate 2.27 times less return on investment than Simply Good. But when comparing it to its historical volatility, Visa Class A is 1.12 times less risky than Simply Good. It trades about 0.29 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.59 of returns per unit of risk over similar time horizon. If you would invest 3,225 in Simply Good Foods on August 24, 2024 and sell it today you would earn a total of 696.00 from holding Simply Good Foods or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. Simply Good Foods
Performance |
| Timeline |
| Visa Class A |
| Simply Good Foods |
Visa and Simply Good Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Simply Good
The main advantage of trading using opposite Visa and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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