Correlation Between Visa and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both Visa and Kaulin Mfg 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 Kaulin Mfg 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 Kaulin Mfg, you can compare the effects of market volatilities on Visa and Kaulin Mfg 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 Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Kaulin Mfg.
Diversification Opportunities for Visa and Kaulin Mfg
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Kaulin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg 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 Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Visa i.e., Visa and Kaulin Mfg go up and down completely randomly.
Pair Corralation between Visa and Kaulin Mfg
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Kaulin Mfg. However, Visa Class A is 3.35 times less risky than Kaulin Mfg. It trades about 0.33 of its potential returns per unit of risk. Kaulin Mfg is currently generating about 0.09 per unit of risk. If you would invest 28,268 in Visa Class A on August 25, 2024 and sell it today you would earn a total of 2,724 from holding Visa Class A or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Kaulin Mfg
Performance |
| Timeline |
| Visa Class A |
| Kaulin Mfg |
Visa and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Kaulin Mfg
The main advantage of trading using opposite Visa and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Kaulin Mfg vs. Sunny Friend Environmental | Kaulin Mfg vs. Taiwan Secom Co | Kaulin Mfg vs. TTET Union Corp | Kaulin Mfg vs. ECOVE Environment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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