Correlation Between Visa and Valic Company
Can any of the company-specific risk be diversified away by investing in both Visa and Valic Company 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 Valic Company 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 Valic Company I, you can compare the effects of market volatilities on Visa and Valic Company 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 Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Valic Company.
Diversification Opportunities for Visa and Valic Company
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Valic is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I 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 Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Visa i.e., Visa and Valic Company go up and down completely randomly.
Pair Corralation between Visa and Valic Company
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.3 times more return on investment than Valic Company. However, Visa is 1.3 times more volatile than Valic Company I. It trades about 0.1 of its potential returns per unit of risk. Valic Company I is currently generating about 0.12 per unit of risk. If you would invest 22,355 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 9,153 from holding Visa Class A or generate 40.94% 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. Valic Company I
Performance |
| Timeline |
| Visa Class A |
| Valic Company I |
Visa and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Valic Company
The main advantage of trading using opposite Visa and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Valic Company vs. Mid Cap Index | Valic Company vs. Valic Company I | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I |
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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