Correlation Between Visa and BW LPG
Can any of the company-specific risk be diversified away by investing in both Visa and BW LPG 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 BW LPG 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 BW LPG Limited, you can compare the effects of market volatilities on Visa and BW LPG 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 BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BW LPG.
Diversification Opportunities for Visa and BW LPG
Pay attention - limited upside
The 3 months correlation between Visa and BWLP is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited 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 BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Visa i.e., Visa and BW LPG go up and down completely randomly.
Pair Corralation between Visa and BW LPG
Taking into account the 90-day investment horizon Visa is expected to generate 1.93 times less return on investment than BW LPG. But when comparing it to its historical volatility, Visa Class A is 3.11 times less risky than BW LPG. It trades about 0.1 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 710.00 in BW LPG Limited on August 31, 2024 and sell it today you would earn a total of 517.00 from holding BW LPG Limited or generate 72.82% 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. BW LPG Limited
Performance |
| Timeline |
| Visa Class A |
| BW LPG Limited |
Visa and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BW LPG
The main advantage of trading using opposite Visa and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BW LPG vs. Celsius Holdings | BW LPG vs. PepsiCo | BW LPG vs. Xponential Fitness | BW LPG vs. Northstar Clean Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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