Correlation Between Visa and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Visa and LPKF Laser 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 LPKF Laser 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 LPKF Laser Electronics, you can compare the effects of market volatilities on Visa and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and LPKF Laser.
Diversification Opportunities for Visa and LPKF Laser
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and LPKF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Visa i.e., Visa and LPKF Laser go up and down completely randomly.
Pair Corralation between Visa and LPKF Laser
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.66 times more return on investment than LPKF Laser. However, Visa Class A is 1.52 times less risky than LPKF Laser. It trades about 0.05 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.01 per unit of risk. If you would invest 31,722 in Visa Class A on October 23, 2024 and sell it today you would earn a total of 240.00 from holding Visa Class A or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. LPKF Laser Electronics
Performance |
| Timeline |
| Visa Class A |
| LPKF Laser Electronics |
Visa and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and LPKF Laser
The main advantage of trading using opposite Visa and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser'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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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