Correlation Between Visa and TPG RE
Can any of the company-specific risk be diversified away by investing in both Visa and TPG RE 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 TPG RE 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 TPG RE Finance, you can compare the effects of market volatilities on Visa and TPG RE 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 TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and TPG RE.
Diversification Opportunities for Visa and TPG RE
Good diversification
The 3 months correlation between Visa and TPG is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance 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 TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of Visa i.e., Visa and TPG RE go up and down completely randomly.
Pair Corralation between Visa and TPG RE
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.69 times more return on investment than TPG RE. However, Visa Class A is 1.45 times less risky than TPG RE. It trades about 0.66 of its potential returns per unit of risk. TPG RE Finance is currently generating about 0.09 per unit of risk. If you would invest 31,908 in Visa Class A on November 18, 2024 and sell it today you would earn a total of 3,473 from holding Visa Class A or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. TPG RE Finance
Performance |
| Timeline |
| Visa Class A |
| TPG RE Finance |
Visa and TPG RE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and TPG RE
The main advantage of trading using opposite Visa and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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