Correlation Between Visa and XBiotech
Can any of the company-specific risk be diversified away by investing in both Visa and XBiotech 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 XBiotech 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 XBiotech, you can compare the effects of market volatilities on Visa and XBiotech 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 XBiotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and XBiotech.
Diversification Opportunities for Visa and XBiotech
Excellent diversification
The 3 months correlation between Visa and XBiotech is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and XBiotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBiotech 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 XBiotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBiotech has no effect on the direction of Visa i.e., Visa and XBiotech go up and down completely randomly.
Pair Corralation between Visa and XBiotech
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.22 times more return on investment than XBiotech. However, Visa Class A is 4.52 times less risky than XBiotech. It trades about 0.18 of its potential returns per unit of risk. XBiotech is currently generating about -0.06 per unit of risk. If you would invest 27,801 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 6,504 from holding Visa Class A or generate 23.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. XBiotech
Performance |
| Timeline |
| Visa Class A |
| XBiotech |
Visa and XBiotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and XBiotech
The main advantage of trading using opposite Visa and XBiotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, XBiotech 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 XBiotech will offset losses from the drop in XBiotech's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| XBiotech vs. Generation Bio Co | XBiotech vs. Kronos Bio | XBiotech vs. Erasca Inc | XBiotech vs. C4 Therapeutics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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