Correlation Between Visa and Lyxor BEL
Can any of the company-specific risk be diversified away by investing in both Visa and Lyxor BEL 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 Lyxor BEL 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 Lyxor BEL 20, you can compare the effects of market volatilities on Visa and Lyxor BEL 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 Lyxor BEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lyxor BEL.
Diversification Opportunities for Visa and Lyxor BEL
Very good diversification
The 3 months correlation between Visa and Lyxor is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lyxor BEL 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor BEL 20 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 Lyxor BEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor BEL 20 has no effect on the direction of Visa i.e., Visa and Lyxor BEL go up and down completely randomly.
Pair Corralation between Visa and Lyxor BEL
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.5 times more return on investment than Lyxor BEL. However, Visa is 1.5 times more volatile than Lyxor BEL 20. It trades about 0.28 of its potential returns per unit of risk. Lyxor BEL 20 is currently generating about -0.06 per unit of risk. If you would invest 27,442 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 4,028 from holding Visa Class A or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lyxor BEL 20
Performance |
| Timeline |
| Visa Class A |
| Lyxor BEL 20 |
Visa and Lyxor BEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lyxor BEL
The main advantage of trading using opposite Visa and Lyxor BEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lyxor BEL 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 Lyxor BEL will offset losses from the drop in Lyxor BEL's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lyxor BEL vs. iShares II Public | Lyxor BEL vs. VanEck AEX UCITS | Lyxor BEL vs. Amundi Index Solutions | Lyxor BEL vs. Ackermans Van Haaren |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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