Correlation Between Visa and China Everbright
Can any of the company-specific risk be diversified away by investing in both Visa and China Everbright 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 China Everbright 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 China Everbright Environment, you can compare the effects of market volatilities on Visa and China Everbright 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 China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Everbright.
Diversification Opportunities for Visa and China Everbright
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and China is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Everbright Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Env 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 China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Env has no effect on the direction of Visa i.e., Visa and China Everbright go up and down completely randomly.
Pair Corralation between Visa and China Everbright
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than China Everbright. However, Visa Class A is 2.27 times less risky than China Everbright. It trades about 0.08 of its potential returns per unit of risk. China Everbright Environment is currently generating about 0.01 per unit of risk. If you would invest 21,523 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 9,947 from holding Visa Class A or generate 46.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 41.3% |
| Values | Daily Returns |
Visa Class A vs. China Everbright Environment
Performance |
| Timeline |
| Visa Class A |
| China Everbright Env |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and China Everbright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and China Everbright
The main advantage of trading using opposite Visa and China Everbright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Everbright 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 China Everbright will offset losses from the drop in China Everbright's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| China Everbright vs. Perma Fix Environmental Svcs | China Everbright vs. Casella Waste Systems | China Everbright vs. Clean Harbors | China Everbright vs. Montrose Environmental Grp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |