Correlation Between Meta Platforms and Visa
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Visa Class A, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Visa.
Diversification Opportunities for Meta Platforms and Visa
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and Visa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms 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 Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Visa go up and down completely randomly.
Pair Corralation between Meta Platforms and Visa
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Visa. In addition to that, Meta Platforms is 2.78 times more volatile than Visa Class A. It trades about -0.19 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.05 per unit of volatility. If you would invest 21,118 in Visa Class A on January 24, 2024 and sell it today you would earn a total of 6,115 from holding Visa Class A or generate 28.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 7.69% |
| Values | Daily Returns |
Meta Platforms vs. Visa Class A
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Visa Class A |
Meta Platforms and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Visa
The main advantage of trading using opposite Meta Platforms and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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