Correlation Between Visa and CKM Building
Can any of the company-specific risk be diversified away by investing in both Visa and CKM Building 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 CKM Building 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 CKM Building Material, you can compare the effects of market volatilities on Visa and CKM Building 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 CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CKM Building.
Diversification Opportunities for Visa and CKM Building
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and CKM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Visa i.e., Visa and CKM Building go up and down completely randomly.
Pair Corralation between Visa and CKM Building
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.62 times more return on investment than CKM Building. However, Visa Class A is 1.6 times less risky than CKM Building. It trades about 0.44 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.17 per unit of risk. If you would invest 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Visa Class A vs. CKM Building Material
Performance |
| Timeline |
| Visa Class A |
| CKM Building Material |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Visa and CKM Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CKM Building
The main advantage of trading using opposite Visa and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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.
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