Correlation Between Visa and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Visa and Central Puerto 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 Central Puerto 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 Central Puerto SA, you can compare the effects of market volatilities on Visa and Central Puerto 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 Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Central Puerto.
Diversification Opportunities for Visa and Central Puerto
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Central is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto 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 Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Visa i.e., Visa and Central Puerto go up and down completely randomly.
Pair Corralation between Visa and Central Puerto
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.27 times more return on investment than Central Puerto. However, Visa Class A is 3.65 times less risky than Central Puerto. It trades about 0.09 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.03 per unit of risk. If you would invest 31,488 in Visa Class A on October 20, 2024 and sell it today you would earn a total of 474.00 from holding Visa Class A or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Central Puerto SA
Performance |
| Timeline |
| Visa Class A |
| Central Puerto SA |
Visa and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Central Puerto
The main advantage of trading using opposite Visa and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding SA | Central Puerto vs. Empresa Distribuidora Electrica |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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