Correlation Between Visa and Benefit Systems
Can any of the company-specific risk be diversified away by investing in both Visa and Benefit Systems 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 Benefit Systems 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 Benefit Systems SA, you can compare the effects of market volatilities on Visa and Benefit Systems 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 Benefit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Benefit Systems.
Diversification Opportunities for Visa and Benefit Systems
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Benefit is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Benefit Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benefit Systems SA 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 Benefit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benefit Systems SA has no effect on the direction of Visa i.e., Visa and Benefit Systems go up and down completely randomly.
Pair Corralation between Visa and Benefit Systems
Taking into account the 90-day investment horizon Visa is expected to generate 1.13 times less return on investment than Benefit Systems. But when comparing it to its historical volatility, Visa Class A is 1.81 times less risky than Benefit Systems. It trades about 0.35 of its potential returns per unit of risk. Benefit Systems SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 240,500 in Benefit Systems SA on September 1, 2024 and sell it today you would earn a total of 23,500 from holding Benefit Systems SA or generate 9.77% 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. Benefit Systems SA
Performance |
| Timeline |
| Visa Class A |
| Benefit Systems SA |
Visa and Benefit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Benefit Systems
The main advantage of trading using opposite Visa and Benefit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Benefit Systems 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 Benefit Systems will offset losses from the drop in Benefit Systems' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Benefit Systems vs. Banco Santander SA | Benefit Systems vs. UniCredit SpA | Benefit Systems vs. CEZ as | Benefit Systems vs. Polski Koncern Naftowy |
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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