Correlation Between Visa and ETRADE Financial

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

Diversification Opportunities for Visa and ETRADE Financial

0.0

Correlation Coefficient

Visa  ETRADE Financial

Pay attention - limited upside

The 3 months correlation between Visa and ETRADE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ETRADE Financial LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRADE Financial LLC 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 ETRADE Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRADE Financial LLC has no effect on the direction of Visa i.e., Visa and ETRADE Financial go up and down completely randomly.

Pair Corralation between Visa and ETRADE Financial

If you would invest (100.00) in ETRADE Financial LLC on January 29, 2024 and sell it today you would earn a total of  100.00  from holding ETRADE Financial LLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  ETRADE Financial LLC

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ETRADE Financial LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRADE Financial LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRADE Financial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and ETRADE Financial

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

The idea behind Visa Class A and ETRADE Financial LLC 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 CEOs Directory module to screen CEOs from public companies around the world.