Correlation Between Visa and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Visa and TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC, you can compare the effects of market volatilities on Visa and TechnipFMC PLC 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 TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and TechnipFMC PLC.
Diversification Opportunities for Visa and TechnipFMC PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and TechnipFMC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC 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 TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of Visa i.e., Visa and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Visa and TechnipFMC PLC
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.56 times more return on investment than TechnipFMC PLC. However, Visa Class A is 1.79 times less risky than TechnipFMC PLC. It trades about 0.44 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about -0.11 per unit of risk. If you would invest 31,491 in Visa Class A on November 4, 2024 and sell it today you would earn a total of 2,689 from holding Visa Class A or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Visa Class A vs. TechnipFMC PLC
Performance |
| Timeline |
| Visa Class A |
| TechnipFMC PLC |
Visa and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and TechnipFMC PLC
The main advantage of trading using opposite Visa and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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