Correlation Between Visa and AGF Management
Can any of the company-specific risk be diversified away by investing in both Visa and AGF Management 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 AGF Management 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 AGF Management Limited, you can compare the effects of market volatilities on Visa and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AGF Management.
Diversification Opportunities for Visa and AGF Management
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and AGF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Visa i.e., Visa and AGF Management go up and down completely randomly.
Pair Corralation between Visa and AGF Management
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.61 times more return on investment than AGF Management. However, Visa Class A is 1.63 times less risky than AGF Management. It trades about 0.49 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.19 per unit of risk. If you would invest 31,440 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 2,865 from holding Visa Class A or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Visa Class A vs. AGF Management Limited
Performance |
| Timeline |
| Visa Class A |
| AGF Management |
Visa and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AGF Management
The main advantage of trading using opposite Visa and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| AGF Management vs. IGM Financial | AGF Management vs. CI Financial Corp | AGF Management vs. iA Financial | AGF Management vs. Transcontinental |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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