Correlation Between Visa and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Visa and Aston Martin 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 Aston Martin 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 Aston Martin Lagonda, you can compare the effects of market volatilities on Visa and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Aston Martin.
Diversification Opportunities for Visa and Aston Martin
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Aston is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Visa i.e., Visa and Aston Martin go up and down completely randomly.
Pair Corralation between Visa and Aston Martin
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.31 times more return on investment than Aston Martin. However, Visa Class A is 3.22 times less risky than Aston Martin. It trades about 0.1 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.06 per unit of risk. If you would invest 22,097 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 9,411 from holding Visa Class A or generate 42.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Aston Martin Lagonda
Performance |
| Timeline |
| Visa Class A |
| Aston Martin Lagonda |
Visa and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Aston Martin
The main advantage of trading using opposite Visa and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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