Correlation Between Visa and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both Visa and Amadeus IT 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 Amadeus IT 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 Amadeus IT Group, you can compare the effects of market volatilities on Visa and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Amadeus IT.
Diversification Opportunities for Visa and Amadeus IT
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Amadeus is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of Visa i.e., Visa and Amadeus IT go up and down completely randomly.
Pair Corralation between Visa and Amadeus IT
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.85 times more return on investment than Amadeus IT. However, Visa Class A is 1.18 times less risky than Amadeus IT. It trades about 0.07 of its potential returns per unit of risk. Amadeus IT Group is currently generating about 0.02 per unit of risk. If you would invest 23,674 in Visa Class A on January 10, 2025 and sell it today you would earn a total of 8,787 from holding Visa Class A or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.56% |
| Values | Daily Returns |
Visa Class A vs. Amadeus IT Group
Performance |
| Timeline |
| Visa Class A |
| Amadeus IT Group |
Visa and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Amadeus IT
The main advantage of trading using opposite Visa and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT'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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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