Correlation Between Visa and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Visa and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Visa and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Alton Sports.
Diversification Opportunities for Visa and Alton Sports
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Alton is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Visa i.e., Visa and Alton Sports go up and down completely randomly.
Pair Corralation between Visa and Alton Sports
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.6 times more return on investment than Alton Sports. However, Visa Class A is 1.68 times less risky than Alton Sports. It trades about 0.25 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.05 per unit of risk. If you would invest 28,134 in Visa Class A on October 29, 2024 and sell it today you would earn a total of 4,886 from holding Visa Class A or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Visa Class A vs. Alton Sports CoLtd
Performance |
| Timeline |
| Visa Class A |
| Alton Sports CoLtd |
Visa and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Alton Sports
The main advantage of trading using opposite Visa and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Alton Sports vs. Samsung Electronics Co | Alton Sports vs. Samsung Electronics Co | Alton Sports vs. KB Financial Group | Alton Sports vs. Shinhan Financial 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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