Correlation Between Visa and Dassault Aviation
Can any of the company-specific risk be diversified away by investing in both Visa and Dassault Aviation 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 Dassault Aviation 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 Dassault Aviation SA, you can compare the effects of market volatilities on Visa and Dassault Aviation 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 Dassault Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Dassault Aviation.
Diversification Opportunities for Visa and Dassault Aviation
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Dassault is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation 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 Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of Visa i.e., Visa and Dassault Aviation go up and down completely randomly.
Pair Corralation between Visa and Dassault Aviation
Taking into account the 90-day investment horizon Visa is expected to generate 1.4 times less return on investment than Dassault Aviation. But when comparing it to its historical volatility, Visa Class A is 4.11 times less risky than Dassault Aviation. It trades about 0.09 of its potential returns per unit of risk. Dassault Aviation SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,879 in Dassault Aviation SA on September 3, 2024 and sell it today you would earn a total of 3,891 from holding Dassault Aviation SA or generate 26.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Visa Class A vs. Dassault Aviation SA
Performance |
| Timeline |
| Visa Class A |
| Dassault Aviation |
Visa and Dassault Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Dassault Aviation
The main advantage of trading using opposite Visa and Dassault Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Dassault Aviation 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 Dassault Aviation will offset losses from the drop in Dassault Aviation's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Dassault Aviation vs. Induction Healthcare Group | Dassault Aviation vs. Spire Healthcare Group | Dassault Aviation vs. Vulcan Materials Co | Dassault Aviation vs. CVS Health Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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