Correlation Between Visa and Dave

Can any of the company-specific risk be diversified away by investing in both Visa and Dave 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 Dave 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 Dave Inc, you can compare the effects of market volatilities on Visa and Dave 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 Dave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Dave.

Diversification Opportunities for Visa and Dave

0.38

Correlation Coefficient

Visa  Dave

Weak diversification

The 3 months correlation between Visa and Dave is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Dave Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Inc 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 Dave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Inc has no effect on the direction of Visa i.e., Visa and Dave go up and down completely randomly.

Pair Corralation between Visa and Dave

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.19 times more return on investment than Dave. However, Visa Class A is 5.26 times less risky than Dave. It trades about -0.24 of its potential returns per unit of risk. Dave Inc is currently generating about -0.1 per unit of risk. If you would invest  28,121  in Visa Class A on January 24, 2024 and sell it today you would lose (888.00) from holding Visa Class A or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Dave Inc

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.

Dave Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Dave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Dave

The main advantage of trading using opposite Visa and Dave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Dave 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 Dave will offset losses from the drop in Dave's long position.

The idea behind Visa Class A and Dave Inc 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.