Correlation Between Visa and Aena SME
Can any of the company-specific risk be diversified away by investing in both Visa and Aena SME 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 Aena SME 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 Aena SME SA, you can compare the effects of market volatilities on Visa and Aena SME 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 Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Aena SME.
Diversification Opportunities for Visa and Aena SME
Pay attention - limited upside
The 3 months correlation between Visa and Aena is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA 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 Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Visa i.e., Visa and Aena SME go up and down completely randomly.
Pair Corralation between Visa and Aena SME
Taking into account the 90-day investment horizon Visa is expected to generate 1.41 times less return on investment than Aena SME. But when comparing it to its historical volatility, Visa Class A is 1.99 times less risky than Aena SME. It trades about 0.08 of its potential returns per unit of risk. Aena SME SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,912 in Aena SME SA on August 25, 2024 and sell it today you would earn a total of 7,896 from holding Aena SME SA or generate 61.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Aena SME SA
Performance |
| Timeline |
| Visa Class A |
| Aena SME SA |
Visa and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Aena SME
The main advantage of trading using opposite Visa and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Aena SME 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 Aena SME will offset losses from the drop in Aena SME's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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