Correlation Between Visa and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Visa and Canacol Energy 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 Canacol Energy 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 Canacol Energy, you can compare the effects of market volatilities on Visa and Canacol Energy 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 Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Canacol Energy.
Diversification Opportunities for Visa and Canacol Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Canacol is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy 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 Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of Visa i.e., Visa and Canacol Energy go up and down completely randomly.
Pair Corralation between Visa and Canacol Energy
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.4 times more return on investment than Canacol Energy. However, Visa Class A is 2.5 times less risky than Canacol Energy. It trades about 0.11 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.04 per unit of risk. If you would invest 26,932 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Visa Class A vs. Canacol Energy
Performance |
| Timeline |
| Visa Class A |
| Canacol Energy |
Visa and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Canacol Energy
The main advantage of trading using opposite Visa and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Canacol Energy 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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