Correlation Between Visa and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Visa and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC ADR, you can compare the effects of market volatilities on Visa and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AstraZeneca PLC.
Diversification Opportunities for Visa and AstraZeneca PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and AstraZeneca is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Visa i.e., Visa and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Visa and AstraZeneca PLC
Taking into account the 90-day investment horizon Visa is expected to generate 2.96 times less return on investment than AstraZeneca PLC. But when comparing it to its historical volatility, Visa Class A is 1.03 times less risky than AstraZeneca PLC. It trades about 0.05 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,523 in AstraZeneca PLC ADR on October 23, 2024 and sell it today you would earn a total of 155.00 from holding AstraZeneca PLC ADR or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. AstraZeneca PLC ADR
Performance |
| Timeline |
| Visa Class A |
| AstraZeneca PLC ADR |
Visa and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AstraZeneca PLC
The main advantage of trading using opposite Visa and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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