Correlation Between Visa and Amundi Stoxx
Can any of the company-specific risk be diversified away by investing in both Visa and Amundi Stoxx 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 Amundi Stoxx 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 Amundi Stoxx Europe, you can compare the effects of market volatilities on Visa and Amundi Stoxx 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 Amundi Stoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Amundi Stoxx.
Diversification Opportunities for Visa and Amundi Stoxx
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Amundi is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Amundi Stoxx Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Stoxx Europe 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 Amundi Stoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Stoxx Europe has no effect on the direction of Visa i.e., Visa and Amundi Stoxx go up and down completely randomly.
Pair Corralation between Visa and Amundi Stoxx
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.74 times more return on investment than Amundi Stoxx. However, Visa is 1.74 times more volatile than Amundi Stoxx Europe. It trades about 0.12 of its potential returns per unit of risk. Amundi Stoxx Europe is currently generating about 0.01 per unit of risk. If you would invest 28,482 in Visa Class A on September 12, 2024 and sell it today you would earn a total of 2,756 from holding Visa Class A or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Visa Class A vs. Amundi Stoxx Europe
Performance |
| Timeline |
| Visa Class A |
| Amundi Stoxx Europe |
Visa and Amundi Stoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Amundi Stoxx
The main advantage of trading using opposite Visa and Amundi Stoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Amundi Stoxx 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 Amundi Stoxx will offset losses from the drop in Amundi Stoxx's long position.The idea behind Visa Class A and Amundi Stoxx Europe 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.| Amundi Stoxx vs. Amundi Index Solutions | Amundi Stoxx vs. Amundi Index Solutions | Amundi Stoxx vs. Amundi Index Solutions | Amundi Stoxx vs. Amundi Index Solutions |
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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