Correlation Between Visa and Vector
Can any of the company-specific risk be diversified away by investing in both Visa and Vector 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 Vector 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 Vector Group, you can compare the effects of market volatilities on Visa and Vector 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 Vector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Vector.
Diversification Opportunities for Visa and Vector
Very weak diversification
The 3 months correlation between Visa and Vector is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Vector Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vector Group 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 Vector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vector Group has no effect on the direction of Visa i.e., Visa and Vector go up and down completely randomly.
Pair Corralation between Visa and Vector
Taking into account the 90-day investment horizon Visa is expected to generate 3.06 times less return on investment than Vector. But when comparing it to its historical volatility, Visa Class A is 1.32 times less risky than Vector. It trades about 0.1 of its potential returns per unit of risk. Vector Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Vector Group on September 2, 2024 and sell it today you would earn a total of 419.00 from holding Vector Group or generate 38.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 69.84% |
| Values | Daily Returns |
Visa Class A vs. Vector Group
Performance |
| Timeline |
| Visa Class A |
| Vector Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Vector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Vector
The main advantage of trading using opposite Visa and Vector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Vector 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 Vector will offset losses from the drop in Vector's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Vector vs. Universal | Vector vs. Imperial Brands PLC | Vector vs. Japan Tobacco ADR | Vector vs. Philip Morris International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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