Correlation Between FS Credit and Visa
Can any of the company-specific risk be diversified away by investing in both FS Credit 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 FS Credit and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Credit Opportunities and Visa Class A, you can compare the effects of market volatilities on FS Credit 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 FS Credit with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Credit and Visa.
Diversification Opportunities for FS Credit and Visa
Poor diversification
The 3 months correlation between FSCO and Visa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FS Credit Opportunities 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 FS Credit 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 FS Credit Opportunities 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 FS Credit i.e., FS Credit and Visa go up and down completely randomly.
Pair Corralation between FS Credit and Visa
Given the investment horizon of 90 days FS Credit Opportunities is expected to generate 0.81 times more return on investment than Visa. However, FS Credit Opportunities is 1.24 times less risky than Visa. It trades about 0.18 of its potential returns per unit of risk. Visa Class A is currently generating about 0.08 per unit of risk. If you would invest 648.00 in FS Credit Opportunities on December 25, 2024 and sell it today you would earn a total of 60.00 from holding FS Credit Opportunities or generate 9.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
FS Credit Opportunities vs. Visa Class A
Performance |
Timeline |
FS Credit Opportunities |
Visa Class A |
FS Credit and Visa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FS Credit and Visa
The main advantage of trading using opposite FS Credit and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Credit 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.FS Credit vs. MFS Investment Grade | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal | FS Credit vs. Investcorp Credit Management |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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