Correlation Between Visa and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Visa and CCL Industries 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 CCL Industries 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 CCL Industries, you can compare the effects of market volatilities on Visa and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CCL Industries.
Diversification Opportunities for Visa and CCL Industries
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and CCL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Visa i.e., Visa and CCL Industries go up and down completely randomly.
Pair Corralation between Visa and CCL Industries
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.81 times more return on investment than CCL Industries. However, Visa Class A is 1.23 times less risky than CCL Industries. It trades about 0.33 of its potential returns per unit of risk. CCL Industries is currently generating about -0.08 per unit of risk. If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. CCL Industries
Performance |
| Timeline |
| Visa Class A |
| CCL Industries |
Visa and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CCL Industries
The main advantage of trading using opposite Visa and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| CCL Industries vs. AptarGroup | CCL Industries vs. Superior Plus Corp | CCL Industries vs. NMI Holdings | CCL Industries vs. Origin Agritech |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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