Correlation Between Visa and Cathay TAIEX
Can any of the company-specific risk be diversified away by investing in both Visa and Cathay TAIEX 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 Cathay TAIEX 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 Cathay TAIEX Daily, you can compare the effects of market volatilities on Visa and Cathay TAIEX 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 Cathay TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Cathay TAIEX.
Diversification Opportunities for Visa and Cathay TAIEX
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Cathay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cathay TAIEX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay TAIEX Daily 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 Cathay TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay TAIEX Daily has no effect on the direction of Visa i.e., Visa and Cathay TAIEX go up and down completely randomly.
Pair Corralation between Visa and Cathay TAIEX
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.12 times more return on investment than Cathay TAIEX. However, Visa is 1.12 times more volatile than Cathay TAIEX Daily. It trades about 0.26 of its potential returns per unit of risk. Cathay TAIEX Daily is currently generating about -0.3 per unit of risk. If you would invest 33,398 in Visa Class A on November 27, 2024 and sell it today you would earn a total of 1,455 from holding Visa Class A or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Visa Class A vs. Cathay TAIEX Daily
Performance |
| Timeline |
| Visa Class A |
| Cathay TAIEX Daily |
Visa and Cathay TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Cathay TAIEX
The main advantage of trading using opposite Visa and Cathay TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Cathay TAIEX 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 Cathay TAIEX will offset losses from the drop in Cathay TAIEX's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Cathay TAIEX vs. Cathay TIP TAIEX | Cathay TAIEX vs. Cathay Nasdaq AI | Cathay TAIEX vs. Cathay Dow Jones | Cathay TAIEX vs. Cathay Bloomberg Barclays |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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