Correlation Between Visa and Brown Forman
Can any of the company-specific risk be diversified away by investing in both Visa and Brown Forman 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 Brown Forman 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 Brown Forman, you can compare the effects of market volatilities on Visa and Brown Forman 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 Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Brown Forman.
Diversification Opportunities for Visa and Brown Forman
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Brown is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Brown Forman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman 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 Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of Visa i.e., Visa and Brown Forman go up and down completely randomly.
Pair Corralation between Visa and Brown Forman
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.69 times more return on investment than Brown Forman. However, Visa Class A is 1.46 times less risky than Brown Forman. It trades about 0.33 of its potential returns per unit of risk. Brown Forman is currently generating about -0.3 per unit of risk. If you would invest 28,365 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 2,627 from holding Visa Class A or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Brown Forman
Performance |
| Timeline |
| Visa Class A |
| Brown Forman |
Visa and Brown Forman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Brown Forman
The main advantage of trading using opposite Visa and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Brown Forman vs. MGP Ingredients | Brown Forman vs. Diageo PLC ADR | Brown Forman vs. Constellation Brands Class | Brown Forman vs. Duckhorn Portfolio |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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