Correlation Between Westwood Holdings and Visa
Can any of the company-specific risk be diversified away by investing in both Westwood Holdings and Visa 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 Westwood Holdings and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Holdings Group and Visa Class A, you can compare the effects of market volatilities on Westwood Holdings and Visa 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 Westwood Holdings with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Holdings and Visa.
Diversification Opportunities for Westwood Holdings and Visa
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westwood and Visa is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Holdings Group and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Westwood Holdings 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 Westwood Holdings Group are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Westwood Holdings i.e., Westwood Holdings and Visa go up and down completely randomly.
Pair Corralation between Westwood Holdings and Visa
Considering the 90-day investment horizon Westwood Holdings Group is expected to generate 2.56 times more return on investment than Visa. However, Westwood Holdings is 2.56 times more volatile than Visa Class A. It trades about 0.05 of its potential returns per unit of risk. Visa Class A is currently generating about 0.09 per unit of risk. If you would invest 953.00 in Westwood Holdings Group on September 5, 2024 and sell it today you would earn a total of 618.00 from holding Westwood Holdings Group or generate 64.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Holdings Group vs. Visa Class A
Performance |
| Timeline |
| Westwood Holdings |
| Visa Class A |
Westwood Holdings and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Holdings and Visa
The main advantage of trading using opposite Westwood Holdings and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Holdings position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| Westwood Holdings vs. Visa Class A | Westwood Holdings vs. Deutsche Bank AG | Westwood Holdings vs. Dynex Capital |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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