Correlation Between Visa and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Visa and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Global, you can compare the effects of market volatilities on Visa and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Franklin Mutual.
Diversification Opportunities for Visa and Franklin Mutual
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Franklin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Visa i.e., Visa and Franklin Mutual go up and down completely randomly.
Pair Corralation between Visa and Franklin Mutual
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Franklin Mutual. However, Visa Class A is 1.94 times less risky than Franklin Mutual. It trades about 0.18 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about -0.11 per unit of risk. If you would invest 30,978 in Visa Class A on October 19, 2024 and sell it today you would earn a total of 984.00 from holding Visa Class A or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Franklin Mutual Global
Performance |
| Timeline |
| Visa Class A |
| Franklin Mutual Global |
Visa and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Franklin Mutual
The main advantage of trading using opposite Visa and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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