Correlation Between Visa and Aeroports
Can any of the company-specific risk be diversified away by investing in both Visa and Aeroports 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 Aeroports 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 Aeroports de Paris, you can compare the effects of market volatilities on Visa and Aeroports 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 Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Aeroports.
Diversification Opportunities for Visa and Aeroports
Excellent diversification
The 3 months correlation between Visa and Aeroports is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Visa i.e., Visa and Aeroports go up and down completely randomly.
Pair Corralation between Visa and Aeroports
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.71 times more return on investment than Aeroports. However, Visa is 3.71 times more volatile than Aeroports de Paris. It trades about 0.34 of its potential returns per unit of risk. Aeroports de Paris is currently generating about 0.21 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% 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. Aeroports de Paris
Performance |
| Timeline |
| Visa Class A |
| Aeroports de Paris |
Visa and Aeroports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Aeroports
The main advantage of trading using opposite Visa and Aeroports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Aeroports 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 Aeroports will offset losses from the drop in Aeroports' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Aeroports vs. Japan Airport Terminal | Aeroports vs. Aena SME SA | Aeroports vs. Airports of Thailand | Aeroports vs. Aena SME SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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