Correlation Between Visa and Snap-on Incorporated
Can any of the company-specific risk be diversified away by investing in both Visa and Snap-on Incorporated 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 Snap-on Incorporated 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 Snap on Incorporated, you can compare the effects of market volatilities on Visa and Snap-on Incorporated 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 Snap-on Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Snap-on Incorporated.
Diversification Opportunities for Visa and Snap-on Incorporated
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Snap-on is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap-on Incorporated 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 Snap-on Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap-on Incorporated has no effect on the direction of Visa i.e., Visa and Snap-on Incorporated go up and down completely randomly.
Pair Corralation between Visa and Snap-on Incorporated
Taking into account the 90-day investment horizon Visa is expected to generate 1.29 times less return on investment than Snap-on Incorporated. But when comparing it to its historical volatility, Visa Class A is 1.37 times less risky than Snap-on Incorporated. It trades about 0.08 of its potential returns per unit of risk. Snap on Incorporated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20,914 in Snap on Incorporated on September 2, 2024 and sell it today you would earn a total of 13,956 from holding Snap on Incorporated or generate 66.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.02% |
| Values | Daily Returns |
Visa Class A vs. Snap on Incorporated
Performance |
| Timeline |
| Visa Class A |
| Snap-on Incorporated |
Visa and Snap-on Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Snap-on Incorporated
The main advantage of trading using opposite Visa and Snap-on Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Snap-on Incorporated 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 Snap-on Incorporated will offset losses from the drop in Snap-on Incorporated's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Snap-on Incorporated vs. Brockhaus Capital Management | Snap-on Incorporated vs. Darden Restaurants | Snap-on Incorporated vs. Digilife Technologies Limited | Snap-on Incorporated vs. BJs Restaurants |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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