Correlation Between Visa and InBody CoLtd
Can any of the company-specific risk be diversified away by investing in both Visa and InBody CoLtd 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 InBody CoLtd 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 InBody CoLtd, you can compare the effects of market volatilities on Visa and InBody CoLtd 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 InBody CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and InBody CoLtd.
Diversification Opportunities for Visa and InBody CoLtd
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and InBody is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and InBody CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InBody CoLtd 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 InBody CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InBody CoLtd has no effect on the direction of Visa i.e., Visa and InBody CoLtd go up and down completely randomly.
Pair Corralation between Visa and InBody CoLtd
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.41 times more return on investment than InBody CoLtd. However, Visa Class A is 2.44 times less risky than InBody CoLtd. It trades about 0.29 of its potential returns per unit of risk. InBody CoLtd is currently generating about 0.04 per unit of risk. If you would invest 33,392 in Visa Class A on November 29, 2024 and sell it today you would earn a total of 1,671 from holding Visa Class A or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Visa Class A vs. InBody CoLtd
Performance |
| Timeline |
| Visa Class A |
| InBody CoLtd |
Visa and InBody CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and InBody CoLtd
The main advantage of trading using opposite Visa and InBody CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, InBody CoLtd 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 InBody CoLtd will offset losses from the drop in InBody CoLtd's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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