Correlation Between Visa and Vivint Smart

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

Diversification Opportunities for Visa and Vivint Smart

0.31

Correlation Coefficient

Visa  Vivint Smart

Weak diversification

The 3 months correlation between Visa and Vivint is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Vivint Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivint Smart Home 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 Vivint Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivint Smart Home has no effect on the direction of Visa i.e., Visa and Vivint Smart go up and down completely randomly.

Pair Corralation between Visa and Vivint Smart

If you would invest  1,200  in Vivint Smart Home on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Vivint Smart Home or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Visa Class A  vs.  Vivint Smart Home

Visa Class A

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vivint Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivint Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vivint Smart is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Vivint Smart

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

The idea behind Visa Class A and Vivint Smart Home 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.