Correlation Between Visa and Event Hospitality
Can any of the company-specific risk be diversified away by investing in both Visa and Event Hospitality 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 Event Hospitality 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 Event Hospitality and, you can compare the effects of market volatilities on Visa and Event Hospitality 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 Event Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Event Hospitality.
Diversification Opportunities for Visa and Event Hospitality
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Event is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Visa i.e., Visa and Event Hospitality go up and down completely randomly.
Pair Corralation between Visa and Event Hospitality
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.91 times more return on investment than Event Hospitality. However, Visa Class A is 1.09 times less risky than Event Hospitality. It trades about 0.35 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.23 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. Event Hospitality and
Performance |
| Timeline |
| Visa Class A |
| Event Hospitality |
Visa and Event Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Event Hospitality
The main advantage of trading using opposite Visa and Event Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Event Hospitality 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 Event Hospitality will offset losses from the drop in Event Hospitality's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Event Hospitality vs. ARDAGH METAL PACDL 0001 | Event Hospitality vs. Scandinavian Tobacco Group | Event Hospitality vs. Ubisoft Entertainment SA | Event Hospitality vs. Playa Hotels Resorts |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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