Correlation Between Visa and Henry Schein

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

Diversification Opportunities for Visa and Henry Schein

0.51

Correlation Coefficient

Visa  Henry Schein

Very weak diversification

The 3 months correlation between Visa and Henry is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Henry Schein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henry Schein 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 Henry Schein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henry Schein has no effect on the direction of Visa i.e., Visa and Henry Schein go up and down completely randomly.

Pair Corralation between Visa and Henry Schein

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.66 times more return on investment than Henry Schein. However, Visa Class A is 1.51 times less risky than Henry Schein. It trades about -0.11 of its potential returns per unit of risk. Henry Schein is currently generating about -0.15 per unit of risk. If you would invest  27,908  in Visa Class A on January 28, 2024 and sell it today you would lose (456.00) from holding Visa Class A or give up 1.63% of portfolio value over 90 days.

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

Visa Class A  vs.  Henry Schein

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.

Henry Schein

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Visa and Henry Schein

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

The idea behind Visa Class A and Henry Schein 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.