Correlation Between Xp and Visa
Can any of the company-specific risk be diversified away by investing in both Xp 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 Xp and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Visa Class A, you can compare the effects of market volatilities on Xp 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 Xp with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Visa.
Diversification Opportunities for Xp and Visa
Excellent diversification
The 3 months correlation between Xp and Visa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc 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 Xp 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 Xp Inc 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 Xp i.e., Xp and Visa go up and down completely randomly.
Pair Corralation between Xp and Visa
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Visa. In addition to that, Xp is 2.39 times more volatile than Visa Class A. It trades about -0.04 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.08 per unit of volatility. If you would invest 25,230 in Visa Class A on August 25, 2024 and sell it today you would earn a total of 5,762 from holding Visa Class A or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. Visa Class A
Performance |
| Timeline |
| Xp Inc |
| Visa Class A |
Xp and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Visa
The main advantage of trading using opposite Xp and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp 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.| Xp vs. Visa Class A | Xp vs. Diamond Hill Investment | Xp vs. Distoken Acquisition | Xp vs. AllianceBernstein Holding LP |
| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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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