Correlation Between Visa and Mainstay Mackay

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

Diversification Opportunities for Visa and Mainstay Mackay

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Visa and Mainstay is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mainstay Mackay New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mackay New 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 Mainstay Mackay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mackay New has no effect on the direction of Visa i.e., Visa and Mainstay Mackay go up and down completely randomly.

Pair Corralation between Visa and Mainstay Mackay

Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.43 times more return on investment than Mainstay Mackay. However, Visa is 4.43 times more volatile than Mainstay Mackay New. It trades about 0.09 of its potential returns per unit of risk. Mainstay Mackay New is currently generating about 0.06 per unit of risk. If you would invest  25,251  in Visa Class A on September 28, 2024 and sell it today you would earn a total of  6,556  from holding Visa Class A or generate 25.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

Visa Class A  vs.  Mainstay Mackay New

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
Mainstay Mackay New 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mainstay Mackay New has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Mainstay Mackay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Visa and Mainstay Mackay Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Mainstay Mackay

The main advantage of trading using opposite Visa and Mainstay Mackay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Mainstay Mackay 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 Mainstay Mackay will offset losses from the drop in Mainstay Mackay's long position.
The idea behind Visa Class A and Mainstay Mackay New 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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