Correlation Between Visa and Pampa Energía
Can any of the company-specific risk be diversified away by investing in both Visa and Pampa Energía 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 Pampa Energía 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 Pampa Energa SA, you can compare the effects of market volatilities on Visa and Pampa Energía 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 Pampa Energía. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Pampa Energía.
Diversification Opportunities for Visa and Pampa Energía
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Pampa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa 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 Pampa Energía. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of Visa i.e., Visa and Pampa Energía go up and down completely randomly.
Pair Corralation between Visa and Pampa Energía
Taking into account the 90-day investment horizon Visa is expected to generate 3.32 times less return on investment than Pampa Energía. But when comparing it to its historical volatility, Visa Class A is 1.96 times less risky than Pampa Energía. It trades about 0.35 of its potential returns per unit of risk. Pampa Energa SA is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 6,100 in Pampa Energa SA on September 1, 2024 and sell it today you would earn a total of 2,200 from holding Pampa Energa SA or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. Pampa Energa SA
Performance |
| Timeline |
| Visa Class A |
| Pampa Energa SA |
Visa and Pampa Energía Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Pampa Energía
The main advantage of trading using opposite Visa and Pampa Energía positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Pampa Energía 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 Pampa Energía will offset losses from the drop in Pampa Energía's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Pampa Energía vs. Singapore Telecommunications Limited | Pampa Energía vs. TROPHY GAMES DEV | Pampa Energía vs. COMBA TELECOM SYST | Pampa Energía vs. FRACTAL GAMING GROUP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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