Correlation Between Promotora and Visa
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and Visa Inc, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Visa.
Diversification Opportunities for Promotora and Visa
Significant diversification
The 3 months correlation between Promotora and Visa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Visa go up and down completely randomly.
Pair Corralation between Promotora and Visa
Assuming the 90 days trading horizon Promotora is expected to generate 1.34 times less return on investment than Visa. In addition to that, Promotora is 1.17 times more volatile than Visa Inc. It trades about 0.27 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.43 per unit of volatility. If you would invest 558,908 in Visa Inc on August 25, 2024 and sell it today you would earn a total of 77,592 from holding Visa Inc or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. Visa Inc
Performance |
| Timeline |
| Promotora y Operadora |
| Visa Inc |
Promotora and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Visa
The main advantage of trading using opposite Promotora and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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