Correlation Between Visa and Les Hotels
Can any of the company-specific risk be diversified away by investing in both Visa and Les Hotels 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 Les Hotels 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 Les Hotels Bav, you can compare the effects of market volatilities on Visa and Les Hotels 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 Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Les Hotels.
Diversification Opportunities for Visa and Les Hotels
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Les is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav 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 Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Visa i.e., Visa and Les Hotels go up and down completely randomly.
Pair Corralation between Visa and Les Hotels
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.54 times more return on investment than Les Hotels. However, Visa Class A is 1.86 times less risky than Les Hotels. It trades about 0.08 of its potential returns per unit of risk. Les Hotels Bav is currently generating about 0.03 per unit of risk. If you would invest 21,038 in Visa Class A on August 26, 2024 and sell it today you would earn a total of 9,954 from holding Visa Class A or generate 47.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.57% |
| Values | Daily Returns |
Visa Class A vs. Les Hotels Bav
Performance |
| Timeline |
| Visa Class A |
| Les Hotels Bav |
Visa and Les Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Les Hotels
The main advantage of trading using opposite Visa and Les Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Les Hotels 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 Les Hotels will offset losses from the drop in Les Hotels' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Les Hotels vs. SA Catana Group | Les Hotels vs. Reworld Media | Les Hotels vs. Biosynex | Les Hotels vs. Moulinvest |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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