Correlation Between Visa and ABN AMRO
Can any of the company-specific risk be diversified away by investing in both Visa and ABN AMRO 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 ABN AMRO 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 ABN AMRO Bank, you can compare the effects of market volatilities on Visa and ABN AMRO 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 ABN AMRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ABN AMRO.
Diversification Opportunities for Visa and ABN AMRO
Pay attention - limited upside
The 3 months correlation between Visa and ABN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ABN AMRO Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN AMRO Bank 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 ABN AMRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN AMRO Bank has no effect on the direction of Visa i.e., Visa and ABN AMRO go up and down completely randomly.
Pair Corralation between Visa and ABN AMRO
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.59 times more return on investment than ABN AMRO. However, Visa Class A is 1.69 times less risky than ABN AMRO. It trades about 0.1 of its potential returns per unit of risk. ABN AMRO Bank is currently generating about 0.04 per unit of risk. If you would invest 22,047 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 9,461 from holding Visa Class A or generate 42.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. ABN AMRO Bank
Performance |
| Timeline |
| Visa Class A |
| ABN AMRO Bank |
Visa and ABN AMRO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ABN AMRO
The main advantage of trading using opposite Visa and ABN AMRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ABN AMRO 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 ABN AMRO will offset losses from the drop in ABN AMRO's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ABN AMRO vs. Bank of America | ABN AMRO vs. Bank of America | ABN AMRO vs. Bank of America | ABN AMRO vs. China Construction Bank |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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