Correlation Between Visa and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both Visa and Tetragon Financial 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 Tetragon Financial 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 Tetragon Financial Group, you can compare the effects of market volatilities on Visa and Tetragon Financial 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 Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Tetragon Financial.
Diversification Opportunities for Visa and Tetragon Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Tetragon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Visa i.e., Visa and Tetragon Financial go up and down completely randomly.
Pair Corralation between Visa and Tetragon Financial
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.89 times more return on investment than Tetragon Financial. However, Visa is 1.89 times more volatile than Tetragon Financial Group. It trades about 0.08 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.07 per unit of risk. If you would invest 30,830 in Visa Class A on October 10, 2024 and sell it today you would earn a total of 430.00 from holding Visa Class A or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Tetragon Financial Group
Performance |
| Timeline |
| Visa Class A |
| Tetragon Financial |
Visa and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Tetragon Financial
The main advantage of trading using opposite Visa and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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