Correlation Between Pitney Bowes and Visa

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Can any of the company-specific risk be diversified away by investing in both Pitney Bowes and Visa 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 Pitney Bowes and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pitney Bowes and Visa Inc, you can compare the effects of market volatilities on Pitney Bowes and Visa 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 Pitney Bowes with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pitney Bowes and Visa.

Diversification Opportunities for Pitney Bowes and Visa

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pitney and Visa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pitney Bowes and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Pitney Bowes 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 Pitney Bowes are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Pitney Bowes i.e., Pitney Bowes and Visa go up and down completely randomly.

Pair Corralation between Pitney Bowes and Visa

Considering the 90-day investment horizon Pitney Bowes is expected to under-perform the Visa. In addition to that, Pitney Bowes is 1.71 times more volatile than Visa Inc. It trades about -0.08 of its total potential returns per unit of risk. Visa Inc is currently generating about -0.03 per unit of volatility. If you would invest  23,801  in Visa Inc on April 1, 2022 and sell it today you would lose (3,851)  from holding Visa Inc or give up 16.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pitney Bowes  vs.  Visa Inc

 Performance (%) 
      Timeline 
Pitney Bowes 
Pitney Performance
0 of 100
Over the last 90 days Pitney Bowes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0529
Payout Ratio
0.61
Last Split Factor
2:1
Forward Annual Dividend Rate
0.2
Dividend Date
2022-06-08
Ex Dividend Date
2022-05-20
Last Split Date
1998-01-20

Pitney Price Channel

Visa Inc 
Visa Performance
0 of 100
Over the last 90 days Visa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0079
Payout Ratio
0.22
Last Split Factor
4:1
Forward Annual Dividend Rate
1.5
Dividend Date
2022-06-01
Ex Dividend Date
2022-05-12
Last Split Date
2015-03-19

Visa Price Channel

Pitney Bowes and Visa Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Pitney Bowes and Visa

The main advantage of trading using opposite Pitney Bowes and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pitney Bowes position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.
The idea behind Pitney Bowes and Visa 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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