Correlation Between Visa and Workday
Can any of the company-specific risk be diversified away by investing in both Visa and Workday 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 Workday 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 Workday, you can compare the effects of market volatilities on Visa and Workday 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 Workday. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Workday.
Diversification Opportunities for Visa and Workday
Significant diversification
The 3 months correlation between Visa and Workday is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Visa i.e., Visa and Workday go up and down completely randomly.
Pair Corralation between Visa and Workday
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.62 times more return on investment than Workday. However, Visa Class A is 1.6 times less risky than Workday. It trades about 0.02 of its potential returns per unit of risk. Workday is currently generating about -0.13 per unit of risk. If you would invest 27,210 in Visa Class A on January 25, 2024 and sell it today you would earn a total of 201.00 from holding Visa Class A or generate 0.74% 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. Workday
Performance |
| Timeline |
| Visa Class A |
| Workday |
Visa and Workday Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Workday
The main advantage of trading using opposite Visa and Workday positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Workday 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 Workday will offset losses from the drop in Workday's long position.| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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