Correlation Between Visa and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Sterling Capital 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 Sterling Capital 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 Sterling Capital Mid, you can compare the effects of market volatilities on Visa and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sterling Capital.
Diversification Opportunities for Visa and Sterling Capital
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Sterling is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Mid has no effect on the direction of Visa i.e., Visa and Sterling Capital go up and down completely randomly.
Pair Corralation between Visa and Sterling Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.01 times more return on investment than Sterling Capital. However, Visa is 1.01 times more volatile than Sterling Capital Mid. It trades about 0.08 of its potential returns per unit of risk. Sterling Capital Mid is currently generating about 0.01 per unit of risk. If you would invest 27,727 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 6,453 from holding Visa Class A or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Visa Class A vs. Sterling Capital Mid
Performance |
| Timeline |
| Visa Class A |
| Sterling Capital Mid |
Visa and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sterling Capital
The main advantage of trading using opposite Visa and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Sterling Capital vs. Harbor Diversified International | Sterling Capital vs. Jpmorgan Diversified Fund | Sterling Capital vs. Stone Ridge Diversified | Sterling Capital vs. Fulcrum Diversified Absolute |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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