Correlation Between Visa and ABB PAR
Can any of the company-specific risk be diversified away by investing in both Visa and ABB PAR 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 ABB PAR 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 ABB PAR AB, you can compare the effects of market volatilities on Visa and ABB PAR 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 ABB PAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ABB PAR.
Diversification Opportunities for Visa and ABB PAR
Excellent diversification
The 3 months correlation between Visa and ABB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ABB PAR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB PAR AB 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 ABB PAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB PAR AB has no effect on the direction of Visa i.e., Visa and ABB PAR go up and down completely randomly.
Pair Corralation between Visa and ABB PAR
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.48 times more return on investment than ABB PAR. However, Visa Class A is 2.1 times less risky than ABB PAR. It trades about 0.08 of its potential returns per unit of risk. ABB PAR AB is currently generating about 0.03 per unit of risk. If you would invest 21,523 in Visa Class A on September 28, 2024 and sell it today you would earn a total of 10,284 from holding Visa Class A or generate 47.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.61% |
| Values | Daily Returns |
Visa Class A vs. ABB PAR AB
Performance |
| Timeline |
| Visa Class A |
| ABB PAR AB |
Visa and ABB PAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ABB PAR
The main advantage of trading using opposite Visa and ABB PAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ABB PAR 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 ABB PAR will offset losses from the drop in ABB PAR's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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