Correlation Between Comerica and Visa
Can any of the company-specific risk be diversified away by investing in both Comerica and Visa 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 Comerica and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Visa Class A, you can compare the effects of market volatilities on Comerica and Visa 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 Comerica with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Visa.
Diversification Opportunities for Comerica and Visa
Very good diversification
The 3 months correlation between Comerica and Visa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Comerica 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 Comerica are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Comerica i.e., Comerica and Visa go up and down completely randomly.
Pair Corralation between Comerica and Visa
Considering the 90-day investment horizon Comerica is expected to generate 3.01 times more return on investment than Visa. However, Comerica is 3.01 times more volatile than Visa Class A. It trades about 0.04 of its potential returns per unit of risk. Visa Class A is currently generating about -0.18 per unit of risk. If you would invest 5,206 in Comerica on January 25, 2024 and sell it today you would earn a total of 58.00 from holding Comerica or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. Visa Class A
Performance |
| Timeline |
| Comerica |
| Visa Class A |
Comerica and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Visa
The main advantage of trading using opposite Comerica and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.The idea behind Comerica and Visa Class A 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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