Correlation Between Visa and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both Visa and Cathay Pacific 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 Cathay Pacific 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 Cathay Pacific Airways, you can compare the effects of market volatilities on Visa and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Cathay Pacific.
Diversification Opportunities for Visa and Cathay Pacific
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Cathay is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of Visa i.e., Visa and Cathay Pacific go up and down completely randomly.
Pair Corralation between Visa and Cathay Pacific
If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Visa Class A vs. Cathay Pacific Airways
Performance |
| Timeline |
| Visa Class A |
| Cathay Pacific Airways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Visa and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Cathay Pacific
The main advantage of trading using opposite Visa and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Cathay Pacific vs. Finnair Oyj | Cathay Pacific vs. easyJet plc | Cathay Pacific vs. Norse Atlantic ASA | Cathay Pacific vs. Air New Zealand |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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