Correlation Between Visa and Cambria Cannabis
Can any of the company-specific risk be diversified away by investing in both Visa and Cambria Cannabis 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 Cambria Cannabis 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 Cambria Cannabis ETF, you can compare the effects of market volatilities on Visa and Cambria Cannabis 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 Cambria Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Cambria Cannabis.
Diversification Opportunities for Visa and Cambria Cannabis
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Cambria is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cambria Cannabis ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Cannabis ETF 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 Cambria Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Cannabis ETF has no effect on the direction of Visa i.e., Visa and Cambria Cannabis go up and down completely randomly.
Pair Corralation between Visa and Cambria Cannabis
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than Cambria Cannabis. However, Visa Class A is 1.71 times less risky than Cambria Cannabis. It trades about 0.09 of its potential returns per unit of risk. Cambria Cannabis ETF is currently generating about -0.01 per unit of risk. If you would invest 21,003 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 10,662 from holding Visa Class A or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Cambria Cannabis ETF
Performance |
| Timeline |
| Visa Class A |
| Cambria Cannabis ETF |
Visa and Cambria Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Cambria Cannabis
The main advantage of trading using opposite Visa and Cambria Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Cambria Cannabis 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 Cambria Cannabis will offset losses from the drop in Cambria Cannabis' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Cambria Cannabis vs. Managed Account Series | Cambria Cannabis vs. Fidelity Sai International | Cambria Cannabis vs. Schwab Strategic Trust | Cambria Cannabis vs. Inpex Corp ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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