Correlation Between Visa and AMERICAN
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By analyzing existing cross correlation between Visa Class A and AMERICAN HONDA FINANCE, you can compare the effects of market volatilities on Visa and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AMERICAN.
Diversification Opportunities for Visa and AMERICAN
Very good diversification
The 3 months correlation between Visa and AMERICAN is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AMERICAN HONDA FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN HONDA 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN HONDA FINANCE has no effect on the direction of Visa i.e., Visa and AMERICAN go up and down completely randomly.
Pair Corralation between Visa and AMERICAN
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.24 times more return on investment than AMERICAN. However, Visa is 3.24 times more volatile than AMERICAN HONDA FINANCE. It trades about 0.35 of its potential returns per unit of risk. AMERICAN HONDA FINANCE is currently generating about -0.19 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. AMERICAN HONDA FINANCE
Performance |
| Timeline |
| Visa Class A |
| AMERICAN HONDA FINANCE |
Visa and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AMERICAN
The main advantage of trading using opposite Visa and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| AMERICAN vs. AEP TEX INC | AMERICAN vs. US BANK NATIONAL | AMERICAN vs. Netflix | AMERICAN vs. Empire State Realty |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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