Correlation Between Visa and COFACE SA
Can any of the company-specific risk be diversified away by investing in both Visa and COFACE SA 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 COFACE SA 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 COFACE SA, you can compare the effects of market volatilities on Visa and COFACE SA 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 COFACE SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and COFACE SA.
Diversification Opportunities for Visa and COFACE SA
Excellent diversification
The 3 months correlation between Visa and COFACE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and COFACE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFACE SA 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 COFACE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFACE SA has no effect on the direction of Visa i.e., Visa and COFACE SA go up and down completely randomly.
Pair Corralation between Visa and COFACE SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.68 times more return on investment than COFACE SA. However, Visa Class A is 1.46 times less risky than COFACE SA. It trades about 0.09 of its potential returns per unit of risk. COFACE SA is currently generating about 0.02 per unit of risk. If you would invest 27,028 in Visa Class A on September 24, 2024 and sell it today you would earn a total of 4,743 from holding Visa Class A or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.65% |
| Values | Daily Returns |
Visa Class A vs. COFACE SA
Performance |
| Timeline |
| Visa Class A |
| COFACE SA |
Visa and COFACE SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and COFACE SA
The main advantage of trading using opposite Visa and COFACE SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, COFACE SA 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 COFACE SA will offset losses from the drop in COFACE SA's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
| COFACE SA vs. Sterling Construction | COFACE SA vs. SENECA FOODS A | COFACE SA vs. National Beverage Corp | COFACE SA vs. Dairy Farm International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |