Correlation Between Visa and Voya Retirement
Can any of the company-specific risk be diversified away by investing in both Visa and Voya Retirement 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 Voya Retirement 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 Voya Retirement Growth, you can compare the effects of market volatilities on Visa and Voya Retirement 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 Voya Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Voya Retirement.
Diversification Opportunities for Visa and Voya Retirement
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Voya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Voya Retirement Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Retirement Growth 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 Voya Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Retirement Growth has no effect on the direction of Visa i.e., Visa and Voya Retirement go up and down completely randomly.
Pair Corralation between Visa and Voya Retirement
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.62 times more return on investment than Voya Retirement. However, Visa is 1.62 times more volatile than Voya Retirement Growth. It trades about 0.09 of its potential returns per unit of risk. Voya Retirement Growth is currently generating about 0.1 per unit of risk. If you would invest 20,785 in Visa Class A on September 26, 2024 and sell it today you would earn a total of 10,937 from holding Visa Class A or generate 52.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Visa Class A vs. Voya Retirement Growth
Performance |
Timeline |
Visa Class A |
Voya Retirement Growth |
Visa and Voya Retirement Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Voya Retirement
The main advantage of trading using opposite Visa and Voya Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Voya Retirement 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 Voya Retirement will offset losses from the drop in Voya Retirement's long position.Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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