Correlation Between OneMain Holdings and Visa

Can any of the company-specific risk be diversified away by investing in both OneMain Holdings 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 OneMain Holdings and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OneMain Holdings and Visa Class A, you can compare the effects of market volatilities on OneMain Holdings 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 OneMain Holdings with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of OneMain Holdings and Visa.

Diversification Opportunities for OneMain Holdings and Visa

0.08

Correlation Coefficient

OneMain Holdings  Visa

Significant diversification

The 3 months correlation between OneMain and Visa is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding OneMain Holdings 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 OneMain Holdings 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 OneMain Holdings 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 OneMain Holdings i.e., OneMain Holdings and Visa go up and down completely randomly.

Pair Corralation between OneMain Holdings and Visa

Considering the 90-day investment horizon OneMain Holdings is expected to generate 1.7 times more return on investment than Visa. However, OneMain Holdings is 1.7 times more volatile than Visa Class A. It trades about 0.01 of its potential returns per unit of risk. Visa Class A is currently generating about -0.06 per unit of risk. If you would invest  4,875  in OneMain Holdings on March 13, 2024 and sell it today you would earn a total of  30.00  from holding OneMain Holdings or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OneMain Holdings  vs.  Visa Class A

OneMain Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OneMain Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, OneMain Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with OneMain Holdings and Visa

The main advantage of trading using opposite OneMain Holdings and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OneMain Holdings 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 OneMain Holdings 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.