Correlation Between Macys and Visa
Can any of the company-specific risk be diversified away by investing in both Macys 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 Macys and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Visa Class A, you can compare the effects of market volatilities on Macys 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 Macys with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Visa.
Diversification Opportunities for Macys and Visa
Poor diversification
The 3 months correlation between Macys and Visa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc 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 Macys 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 Macys Inc 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 Macys i.e., Macys and Visa go up and down completely randomly.
Pair Corralation between Macys and Visa
Taking into account the 90-day investment horizon Macys is expected to generate 5.02 times less return on investment than Visa. In addition to that, Macys is 2.67 times more volatile than Visa Class A. It trades about 0.0 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 | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Macys Inc vs. Visa Class A
Performance |
| Timeline |
| Macys Inc |
| Visa Class A |
Macys and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and Visa
The main advantage of trading using opposite Macys and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys 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.| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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