Correlation Between Visa and Kip McGrath

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

Diversification Opportunities for Visa and Kip McGrath

-0.66

Correlation Coefficient

Visa  Kip McGrath

Excellent diversification

The 3 months correlation between Visa and Kip is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Visa i.e., Visa and Kip McGrath go up and down completely randomly.

Pair Corralation between Visa and Kip McGrath

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.43 times more return on investment than Kip McGrath. However, Visa Class A is 2.35 times less risky than Kip McGrath. It trades about 0.21 of its potential returns per unit of risk. Kip McGrath Education is currently generating about -0.04 per unit of risk. If you would invest  31,455  in Visa Class A on November 29, 2024 and sell it today you would earn a total of  3,608  from holding Visa Class A or generate 11.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Visa Class A  vs.  Kip McGrath Education

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 16 (%) 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 March 2025.

Kip McGrath Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kip McGrath Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kip McGrath is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Kip McGrath

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

The idea behind Visa Class A and Kip McGrath Education 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.