Correlation Between Visa and Zepp Health
Can any of the company-specific risk be diversified away by investing in both Visa and Zepp Health 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 Zepp Health 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 Zepp Health Corp, you can compare the effects of market volatilities on Visa and Zepp Health 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 Zepp Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Zepp Health.
Diversification Opportunities for Visa and Zepp Health
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Zepp is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Zepp Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zepp Health Corp 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 Zepp Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zepp Health Corp has no effect on the direction of Visa i.e., Visa and Zepp Health go up and down completely randomly.
Pair Corralation between Visa and Zepp Health
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.22 times more return on investment than Zepp Health. However, Visa Class A is 4.57 times less risky than Zepp Health. It trades about 0.11 of its potential returns per unit of risk. Zepp Health Corp is currently generating about -0.01 per unit of risk. If you would invest 21,122 in Visa Class A on December 2, 2024 and sell it today you would earn a total of 15,149 from holding Visa Class A or generate 71.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Visa Class A vs. Zepp Health Corp
Performance |
Timeline |
Visa Class A |
Zepp Health Corp |
Visa and Zepp Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Zepp Health
The main advantage of trading using opposite Visa and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Zepp Health 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 Zepp Health will offset losses from the drop in Zepp Health's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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