Correlation Between Visa and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both Visa and Worldwide Healthcare 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 Worldwide Healthcare 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 Worldwide Healthcare Trust, you can compare the effects of market volatilities on Visa and Worldwide Healthcare 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Worldwide Healthcare.
Diversification Opportunities for Visa and Worldwide Healthcare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Worldwide is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Visa i.e., Visa and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between Visa and Worldwide Healthcare
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.32 times more return on investment than Worldwide Healthcare. However, Visa is 1.32 times more volatile than Worldwide Healthcare Trust. It trades about 0.07 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.03 per unit of risk. If you would invest 27,118 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 4,201 from holding Visa Class A or generate 15.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Visa Class A vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| Visa Class A |
| Worldwide Healthcare |
Visa and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Worldwide Healthcare
The main advantage of trading using opposite Visa and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Worldwide Healthcare 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Worldwide Healthcare vs. Catalyst Media Group | Worldwide Healthcare vs. Oncimmune Holdings plc | Worldwide Healthcare vs. Invesco Health Care | Worldwide Healthcare vs. Coor Service Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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