Correlation Between Visa and Above Food
Can any of the company-specific risk be diversified away by investing in both Visa and Above Food 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 Above Food 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 Above Food Ingredients, you can compare the effects of market volatilities on Visa and Above Food 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 Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Above Food.
Diversification Opportunities for Visa and Above Food
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Above is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients 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 Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Visa i.e., Visa and Above Food go up and down completely randomly.
Pair Corralation between Visa and Above Food
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.16 times more return on investment than Above Food. However, Visa Class A is 6.36 times less risky than Above Food. It trades about 0.33 of its potential returns per unit of risk. Above Food Ingredients is currently generating about -0.07 per unit of risk. If you would invest 34,247 in Visa Class A on December 1, 2024 and sell it today you would earn a total of 2,024 from holding Visa Class A or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Above Food Ingredients
Performance |
| Timeline |
| Visa Class A |
| Above Food Ingredients |
Visa and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Above Food
The main advantage of trading using opposite Visa and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Above Food vs. Paranovus Entertainment Technology | Above Food vs. Cardinal Health | Above Food vs. Astral Foods Limited | Above Food vs. Ambev SA ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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