Correlation Between Visa and Harbor Capital

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

Diversification Opportunities for Visa and Harbor Capital

-0.31

Correlation Coefficient

Visa  Harbor Capital

Very good diversification

The 3 months correlation between Visa and Harbor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Harbor Capital Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Advisors 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Advisors has no effect on the direction of Visa i.e., Visa and Harbor Capital go up and down completely randomly.

Pair Corralation between Visa and Harbor Capital

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.83 times more return on investment than Harbor Capital. However, Visa Class A is 1.2 times less risky than Harbor Capital. It trades about 0.08 of its potential returns per unit of risk. Harbor Capital Advisors is currently generating about 0.07 per unit of risk. If you would invest  22,590  in Visa Class A on October 26, 2024 and sell it today you would earn a total of  10,430  from holding Visa Class A or generate 46.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.75%
Values	Daily Returns

Visa Class A  vs.  Harbor Capital Advisors

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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 Capital Advisors

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Harbor Capital Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady basic indicators, Harbor Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Harbor Capital

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

The idea behind Visa Class A and Harbor Capital Advisors 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.