Correlation Between Visa and Boldt SA
Can any of the company-specific risk be diversified away by investing in both Visa and Boldt SA 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 Boldt SA 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 Boldt SA, you can compare the effects of market volatilities on Visa and Boldt SA 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 Boldt SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Boldt SA.
Diversification Opportunities for Visa and Boldt SA
Very weak diversification
The 3 months correlation between Visa and Boldt is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Boldt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boldt 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 Boldt SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boldt SA has no effect on the direction of Visa i.e., Visa and Boldt SA go up and down completely randomly.
Pair Corralation between Visa and Boldt SA
Taking into account the 90-day investment horizon Visa is expected to generate 3.72 times less return on investment than Boldt SA. But when comparing it to its historical volatility, Visa Class A is 4.25 times less risky than Boldt SA. It trades about 0.14 of its potential returns per unit of risk. Boldt SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,935 in Boldt SA on September 15, 2024 and sell it today you would earn a total of 355.00 from holding Boldt SA or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Boldt SA
Performance |
| Timeline |
| Visa Class A |
| Boldt SA |
Visa and Boldt SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Boldt SA
The main advantage of trading using opposite Visa and Boldt SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Boldt SA 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 Boldt SA will offset losses from the drop in Boldt SA's long position.The idea behind Visa Class A and Boldt SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Boldt SA vs. Agrometal SAI | Boldt SA vs. Compania de Transporte | Boldt SA vs. Harmony Gold Mining | Boldt SA vs. Telecom Argentina |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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