Correlation Between Visa and Austal
Can any of the company-specific risk be diversified away by investing in both Visa and Austal 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 Austal 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 Austal Limited, you can compare the effects of market volatilities on Visa and Austal 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 Austal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Austal.
Diversification Opportunities for Visa and Austal
Very good diversification
The 3 months correlation between Visa and Austal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Austal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal Limited 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 Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal Limited has no effect on the direction of Visa i.e., Visa and Austal go up and down completely randomly.
Pair Corralation between Visa and Austal
Taking into account the 90-day investment horizon Visa is expected to generate 4.62 times less return on investment than Austal. But when comparing it to its historical volatility, Visa Class A is 2.1 times less risky than Austal. It trades about 0.12 of its potential returns per unit of risk. Austal Limited is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 186.00 in Austal Limited on October 23, 2024 and sell it today you would earn a total of 18.00 from holding Austal Limited or generate 9.68% 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. Austal Limited
Performance |
| Timeline |
| Visa Class A |
| Austal Limited |
Visa and Austal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Austal
The main advantage of trading using opposite Visa and Austal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Austal 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 Austal will offset losses from the drop in Austal's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Austal vs. 808 Renewable Energy | Austal vs. Sky Harbour Group | Austal vs. VirTra Inc | Austal vs. Firan Technology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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