Correlation Between Visa and Touchstone Arbitrage
Can any of the company-specific risk be diversified away by investing in both Visa and Touchstone Arbitrage 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 Touchstone Arbitrage 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 Touchstone Arbitrage Fund, you can compare the effects of market volatilities on Visa and Touchstone Arbitrage 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 Touchstone Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Touchstone Arbitrage.
Diversification Opportunities for Visa and Touchstone Arbitrage
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Touchstone is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Touchstone Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Arbitrage 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 Touchstone Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Arbitrage has no effect on the direction of Visa i.e., Visa and Touchstone Arbitrage go up and down completely randomly.
Pair Corralation between Visa and Touchstone Arbitrage
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.24 times more return on investment than Touchstone Arbitrage. However, Visa is 4.24 times more volatile than Touchstone Arbitrage Fund. It trades about 0.09 of its potential returns per unit of risk. Touchstone Arbitrage Fund is currently generating about 0.16 per unit of risk. If you would invest 24,296 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 7,174 from holding Visa Class A or generate 29.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Touchstone Arbitrage Fund
Performance |
| Timeline |
| Visa Class A |
| Touchstone Arbitrage |
Visa and Touchstone Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Touchstone Arbitrage
The main advantage of trading using opposite Visa and Touchstone Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Touchstone Arbitrage 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 Touchstone Arbitrage will offset losses from the drop in Touchstone Arbitrage's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Touchstone Arbitrage vs. The Hartford Inflation | Touchstone Arbitrage vs. Aqr Managed Futures | Touchstone Arbitrage vs. Goldman Sachs Inflation | Touchstone Arbitrage vs. The Hartford Inflation |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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