Correlation Between Visa and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and SWK Holdings 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 SWK Holdings 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 SWK Holdings Corp, you can compare the effects of market volatilities on Visa and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SWK Holdings.
Diversification Opportunities for Visa and SWK Holdings
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and SWK is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Visa i.e., Visa and SWK Holdings go up and down completely randomly.
Pair Corralation between Visa and SWK Holdings
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.82 times more return on investment than SWK Holdings. However, Visa Class A is 1.22 times less risky than SWK Holdings. It trades about 0.33 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about -0.15 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SWK Holdings Corp
Performance |
| Timeline |
| Visa Class A |
| SWK Holdings Corp |
Visa and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SWK Holdings
The main advantage of trading using opposite Visa and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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