Correlation Between Visa and A1KA34
Can any of the company-specific risk be diversified away by investing in both Visa and A1KA34 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 A1KA34 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 A1KA34, you can compare the effects of market volatilities on Visa and A1KA34 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 A1KA34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and A1KA34.
Diversification Opportunities for Visa and A1KA34
Good diversification
The 3 months correlation between Visa and A1KA34 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and A1KA34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1KA34 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 A1KA34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1KA34 has no effect on the direction of Visa i.e., Visa and A1KA34 go up and down completely randomly.
Pair Corralation between Visa and A1KA34
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.4 times more return on investment than A1KA34. However, Visa Class A is 2.51 times less risky than A1KA34. It trades about 0.24 of its potential returns per unit of risk. A1KA34 is currently generating about 0.03 per unit of risk. If you would invest 28,014 in Visa Class A on September 13, 2024 and sell it today you would earn a total of 3,409 from holding Visa Class A or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Visa Class A vs. A1KA34
Performance |
| Timeline |
| Visa Class A |
| A1KA34 |
Visa and A1KA34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and A1KA34
The main advantage of trading using opposite Visa and A1KA34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, A1KA34 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 A1KA34 will offset losses from the drop in A1KA34'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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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