Correlation Between Visa and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Visa and T.J. Maxx 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 T.J. Maxx 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 The TJX Companies, you can compare the effects of market volatilities on Visa and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and T.J. Maxx.
Diversification Opportunities for Visa and T.J. Maxx
Very weak diversification
The 3 months correlation between Visa and T.J. is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Visa i.e., Visa and T.J. Maxx go up and down completely randomly.
Pair Corralation between Visa and T.J. Maxx
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.93 times more return on investment than T.J. Maxx. However, Visa Class A is 1.07 times less risky than T.J. Maxx. It trades about 0.13 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.1 per unit of risk. If you would invest 26,887 in Visa Class A on November 28, 2024 and sell it today you would earn a total of 8,322 from holding Visa Class A or generate 30.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.86% |
| Values | Daily Returns |
Visa Class A vs. The TJX Companies
Performance |
| Timeline |
| Visa Class A |
| TJX Companies |
Visa and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and T.J. Maxx
The main advantage of trading using opposite Visa and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| T.J. Maxx vs. Xtep International Holdings | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Superior Plus Corp | T.J. Maxx vs. Origin Agritech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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