Correlation Between Visa and Westwood Short
Can any of the company-specific risk be diversified away by investing in both Visa and Westwood Short 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 Westwood Short 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 Westwood Short Duration, you can compare the effects of market volatilities on Visa and Westwood Short 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 Westwood Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Westwood Short.
Diversification Opportunities for Visa and Westwood Short
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Westwood is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Westwood Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Short Duration 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 Westwood Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Short Duration has no effect on the direction of Visa i.e., Visa and Westwood Short go up and down completely randomly.
Pair Corralation between Visa and Westwood Short
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.91 times more return on investment than Westwood Short. However, Visa is 4.91 times more volatile than Westwood Short Duration. It trades about 0.16 of its potential returns per unit of risk. Westwood Short Duration is currently generating about 0.17 per unit of risk. If you would invest 27,801 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 3,707 from holding Visa Class A or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Westwood Short Duration
Performance |
| Timeline |
| Visa Class A |
| Westwood Short Duration |
Visa and Westwood Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Westwood Short
The main advantage of trading using opposite Visa and Westwood Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Westwood Short 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 Westwood Short will offset losses from the drop in Westwood Short's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Westwood Short vs. Westwood Quality Value | Westwood Short vs. Westwood Largecap Value | Westwood Short vs. Westwood Quality Smidcap | Westwood Short vs. Westwood Smallcap Value |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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