Correlation Between Visa and Income Opportunity
Can any of the company-specific risk be diversified away by investing in both Visa and Income Opportunity 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 Income Opportunity 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 Income Opportunity Realty, you can compare the effects of market volatilities on Visa and Income Opportunity 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 Income Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Income Opportunity.
Diversification Opportunities for Visa and Income Opportunity
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Income is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Income Opportunity Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Opportunity Realty 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 Income Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Opportunity Realty has no effect on the direction of Visa i.e., Visa and Income Opportunity go up and down completely randomly.
Pair Corralation between Visa and Income Opportunity
Taking into account the 90-day investment horizon Visa is expected to generate 1.39 times less return on investment than Income Opportunity. But when comparing it to its historical volatility, Visa Class A is 1.98 times less risky than Income Opportunity. It trades about 0.12 of its potential returns per unit of risk. Income Opportunity Realty is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,700 in Income Opportunity Realty on September 18, 2024 and sell it today you would earn a total of 130.00 from holding Income Opportunity Realty or generate 7.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 63.49% |
Values | Daily Returns |
Visa Class A vs. Income Opportunity Realty
Performance |
Timeline |
Visa Class A |
Income Opportunity Realty |
Visa and Income Opportunity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Income Opportunity
The main advantage of trading using opposite Visa and Income Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Income Opportunity 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 Income Opportunity will offset losses from the drop in Income Opportunity's long position.The idea behind Visa Class A and Income Opportunity Realty 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.Income Opportunity vs. IF Bancorp | Income Opportunity vs. ICC Holdings | Income Opportunity vs. Home Federal Bancorp | Income Opportunity vs. Lake Shore Bancorp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Fundamental Analysis View fundamental data based on most recent published financial statements |