Correlation Between Visa and XDN
Can any of the company-specific risk be diversified away by investing in both Visa and XDN 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 XDN 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 XDN, you can compare the effects of market volatilities on Visa and XDN 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 XDN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and XDN.
Diversification Opportunities for Visa and XDN
Poor diversification
The 3 months correlation between Visa and XDN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and XDN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XDN 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 XDN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XDN has no effect on the direction of Visa i.e., Visa and XDN go up and down completely randomly.
Pair Corralation between Visa and XDN
Taking into account the 90-day investment horizon Visa is expected to generate 3.66 times less return on investment than XDN. But when comparing it to its historical volatility, Visa Class A is 3.54 times less risky than XDN. It trades about 0.4 of its potential returns per unit of risk. XDN is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 0.00 in XDN on August 30, 2024 and sell it today you would earn a total of 0.00 from holding XDN or generate 48.28% 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. XDN
Performance |
| Timeline |
| Visa Class A |
| XDN |
Visa and XDN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and XDN
The main advantage of trading using opposite Visa and XDN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, XDN 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 XDN will offset losses from the drop in XDN's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |