Correlation Between Visa and THOR Financial
Can any of the company-specific risk be diversified away by investing in both Visa and THOR 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 THOR 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 THOR Financial Technologies, you can compare the effects of market volatilities on Visa and THOR 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 THOR Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and THOR Financial.
Diversification Opportunities for Visa and THOR Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and THOR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and THOR Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THOR Financial Techn 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 THOR Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THOR Financial Techn has no effect on the direction of Visa i.e., Visa and THOR Financial go up and down completely randomly.
Pair Corralation between Visa and THOR Financial
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.89 times more return on investment than THOR Financial. However, Visa is 1.89 times more volatile than THOR Financial Technologies. It trades about 0.24 of its potential returns per unit of risk. THOR Financial Technologies is currently generating about -0.03 per unit of risk. If you would invest 28,014 in Visa Class A on September 13, 2024 and sell it today you would earn a total of 3,409 from holding Visa Class A or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. THOR Financial Technologies
Performance |
| Timeline |
| Visa Class A |
| THOR Financial Techn |
Visa and THOR Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and THOR Financial
The main advantage of trading using opposite Visa and THOR Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, THOR 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 THOR Financial will offset losses from the drop in THOR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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