Correlation Between Upstart Holdings and Visa

Can any of the company-specific risk be diversified away by investing in both Upstart 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 Upstart Holdings and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Upstart Holdings and Visa Class A, you can compare the effects of market volatilities on Upstart 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 Upstart Holdings with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upstart Holdings and Visa.

Diversification Opportunities for Upstart Holdings and Visa

0.25

Correlation Coefficient

Upstart Holdings  Visa

Modest diversification

The 3 months correlation between Upstart and Visa is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings 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 Upstart 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 Upstart Holdings 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 Upstart Holdings i.e., Upstart Holdings and Visa go up and down completely randomly.

Pair Corralation between Upstart Holdings and Visa

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Visa. In addition to that, Upstart Holdings is 5.53 times more volatile than Visa Class A. It trades about -0.06 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.15 per unit of volatility. If you would invest  31,812  in Visa Class A on December 27, 2024 and sell it today you would earn a total of  3,174  from holding Visa Class A or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Upstart Holdings  vs.  Visa Class A

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Upstart Holdings and Visa

The main advantage of trading using opposite Upstart Holdings and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upstart 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.

The idea behind Upstart Holdings and Visa Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.