Correlation Between Visa and Canfor
Can any of the company-specific risk be diversified away by investing in both Visa and Canfor 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 Canfor 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 Canfor, you can compare the effects of market volatilities on Visa and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Canfor.
Diversification Opportunities for Visa and Canfor
Very weak diversification
The 3 months correlation between Visa and Canfor is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Visa i.e., Visa and Canfor go up and down completely randomly.
Pair Corralation between Visa and Canfor
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Canfor. However, Visa Class A is 2.29 times less risky than Canfor. It trades about 0.1 of its potential returns per unit of risk. Canfor is currently generating about 0.02 per unit of risk. If you would invest 24,113 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 7,395 from holding Visa Class A or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Visa Class A vs. Canfor
Performance |
| Timeline |
| Visa Class A |
| Canfor |
Visa and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Canfor
The main advantage of trading using opposite Visa and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Canfor vs. Canso Credit Trust | Canfor vs. Converge Technology Solutions | Canfor vs. Bank of Nova | Canfor vs. Stampede Drilling |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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