Correlation Between Visa and Cathay Nasdaq
Can any of the company-specific risk be diversified away by investing in both Visa and Cathay Nasdaq 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 Nasdaq 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 Nasdaq AI, you can compare the effects of market volatilities on Visa and Cathay Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Cathay Nasdaq.
Diversification Opportunities for Visa and Cathay Nasdaq
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Cathay is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cathay Nasdaq AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Nasdaq AI 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Nasdaq AI has no effect on the direction of Visa i.e., Visa and Cathay Nasdaq go up and down completely randomly.
Pair Corralation between Visa and Cathay Nasdaq
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.97 times more return on investment than Cathay Nasdaq. However, Visa Class A is 1.03 times less risky than Cathay Nasdaq. It trades about 0.09 of its potential returns per unit of risk. Cathay Nasdaq AI is currently generating about 0.06 per unit of risk. If you would invest 25,387 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 6,121 from holding Visa Class A or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Visa Class A vs. Cathay Nasdaq AI
Performance |
| Timeline |
| Visa Class A |
| Cathay Nasdaq AI |
Visa and Cathay Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Cathay Nasdaq
The main advantage of trading using opposite Visa and Cathay Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Cathay Nasdaq 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 Nasdaq will offset losses from the drop in Cathay Nasdaq's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Cathay Nasdaq vs. Yuanta Daily CSI | Cathay Nasdaq vs. Fubon FTSE Vietnam | Cathay Nasdaq vs. Paradigm SP GSCI |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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