Correlation Between Visa and Harbor Small

Can any of the company-specific risk be diversified away by investing in both Visa and Harbor Small 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 Harbor Small 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 Harbor Small Cap, you can compare the effects of market volatilities on Visa and Harbor Small 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 Harbor Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Harbor Small.

Diversification Opportunities for Visa and Harbor Small

-0.21

Correlation Coefficient

Visa  Harbor Small

Very good diversification

The 3 months correlation between Visa and Harbor is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Harbor Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Small Cap 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 Harbor Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Small Cap has no effect on the direction of Visa i.e., Visa and Harbor Small go up and down completely randomly.

Pair Corralation between Visa and Harbor Small

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.54 times more return on investment than Harbor Small. However, Visa Class A is 1.85 times less risky than Harbor Small. It trades about 0.28 of its potential returns per unit of risk. Harbor Small Cap is currently generating about -0.27 per unit of risk. If you would invest  34,524  in Visa Class A on December 5, 2024 and sell it today you would earn a total of  1,658  from holding Visa Class A or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Harbor Small Cap

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Harbor Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbor Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Visa and Harbor Small

The main advantage of trading using opposite Visa and Harbor Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Harbor Small 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 Harbor Small will offset losses from the drop in Harbor Small's long position.

The idea behind Visa Class A and Harbor Small Cap 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.