Correlation Between Visa and Harvest Eli

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

Diversification Opportunities for Visa and Harvest Eli

0.76

Correlation Coefficient

Visa  Harvest Eli

Poor diversification

The 3 months correlation between Visa and Harvest is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Harvest Eli Lilly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Eli Lilly 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 Harvest Eli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Eli Lilly has no effect on the direction of Visa i.e., Visa and Harvest Eli go up and down completely randomly.

Pair Corralation between Visa and Harvest Eli

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than Harvest Eli. However, Visa Class A is 1.95 times less risky than Harvest Eli. It trades about 0.17 of its potential returns per unit of risk. Harvest Eli Lilly is currently generating about 0.05 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Harvest Eli Lilly

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 April 2025.

Harvest Eli Lilly

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Eli Lilly are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Harvest Eli may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Harvest Eli

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

The idea behind Visa Class A and Harvest Eli Lilly 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.