Correlation Between Visa and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both Visa and Ameren Corp 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 Ameren Corp 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 Ameren Corp, you can compare the effects of market volatilities on Visa and Ameren Corp 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 Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ameren Corp.
Diversification Opportunities for Visa and Ameren Corp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Ameren is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp 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 Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of Visa i.e., Visa and Ameren Corp go up and down completely randomly.
Pair Corralation between Visa and Ameren Corp
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.82 times more return on investment than Ameren Corp. However, Visa Class A is 1.21 times less risky than Ameren Corp. It trades about 0.09 of its potential returns per unit of risk. Ameren Corp is currently generating about 0.03 per unit of risk. If you would invest 21,003 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 10,662 from holding Visa Class A or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.3% |
| Values | Daily Returns |
Visa Class A vs. Ameren Corp
Performance |
| Timeline |
| Visa Class A |
| Ameren Corp |
Visa and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ameren Corp
The main advantage of trading using opposite Visa and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Ameren Corp vs. Axway Software SA | Ameren Corp vs. Westlake Chemical Corp | Ameren Corp vs. Take Two Interactive Software | Ameren Corp vs. Vienna Insurance Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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