Correlation Between Visa and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Visa and Keysight Technologies 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 Keysight Technologies 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 Keysight Technologies, you can compare the effects of market volatilities on Visa and Keysight Technologies 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 Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Keysight Technologies.
Diversification Opportunities for Visa and Keysight Technologies
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Keysight is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Visa i.e., Visa and Keysight Technologies go up and down completely randomly.
Pair Corralation between Visa and Keysight Technologies
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Keysight Technologies. However, Visa Class A is 2.01 times less risky than Keysight Technologies. It trades about 0.08 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.02 per unit of risk. If you would invest 23,685 in Visa Class A on September 12, 2024 and sell it today you would earn a total of 7,553 from holding Visa Class A or generate 31.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.32% |
| Values | Daily Returns |
Visa Class A vs. Keysight Technologies
Performance |
| Timeline |
| Visa Class A |
| Keysight Technologies |
Visa and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Keysight Technologies
The main advantage of trading using opposite Visa and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.The idea behind Visa Class A and Keysight Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Keysight Technologies vs. HEXAGON AB ADR1 | Keysight Technologies vs. Superior Plus Corp | Keysight Technologies vs. SIVERS SEMICONDUCTORS AB | Keysight Technologies vs. NorAm Drilling AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |