Correlation Between Visa and AMREP
Can any of the company-specific risk be diversified away by investing in both Visa and AMREP 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 AMREP 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 AMREP, you can compare the effects of market volatilities on Visa and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AMREP.
Diversification Opportunities for Visa and AMREP
Poor diversification
The 3 months correlation between Visa and AMREP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Visa i.e., Visa and AMREP go up and down completely randomly.
Pair Corralation between Visa and AMREP
Taking into account the 90-day investment horizon Visa is expected to generate 2.61 times less return on investment than AMREP. But when comparing it to its historical volatility, Visa Class A is 3.51 times less risky than AMREP. It trades about 0.33 of its potential returns per unit of risk. AMREP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,000 in AMREP on August 27, 2024 and sell it today you would earn a total of 720.00 from holding AMREP or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. AMREP
Performance |
| Timeline |
| Visa Class A |
| AMREP |
Visa and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AMREP
The main advantage of trading using opposite Visa and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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