Correlation Between Visa and GLOBAL COSMED
Can any of the company-specific risk be diversified away by investing in both Visa and GLOBAL COSMED 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 GLOBAL COSMED 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 GLOBAL MED SA, you can compare the effects of market volatilities on Visa and GLOBAL COSMED 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 GLOBAL COSMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and GLOBAL COSMED.
Diversification Opportunities for Visa and GLOBAL COSMED
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and GLOBAL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and GLOBAL MED SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBAL MED 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 GLOBAL COSMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBAL MED SA has no effect on the direction of Visa i.e., Visa and GLOBAL COSMED go up and down completely randomly.
Pair Corralation between Visa and GLOBAL COSMED
Taking into account the 90-day investment horizon Visa is expected to generate 3.85 times less return on investment than GLOBAL COSMED. But when comparing it to its historical volatility, Visa Class A is 3.65 times less risky than GLOBAL COSMED. It trades about 0.07 of its potential returns per unit of risk. GLOBAL MED SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 41.00 in GLOBAL MED SA on October 23, 2024 and sell it today you would earn a total of 83.00 from holding GLOBAL MED SA or generate 202.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Visa Class A vs. GLOBAL MED SA
Performance |
| Timeline |
| Visa Class A |
| GLOBAL MED SA |
Visa and GLOBAL COSMED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and GLOBAL COSMED
The main advantage of trading using opposite Visa and GLOBAL COSMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, GLOBAL COSMED 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 GLOBAL COSMED will offset losses from the drop in GLOBAL COSMED'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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