Correlation Between Visa and CP All
Can any of the company-specific risk be diversified away by investing in both Visa and CP All 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 CP All 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 CP All PCL, you can compare the effects of market volatilities on Visa and CP All 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 CP All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CP All.
Diversification Opportunities for Visa and CP All
Modest diversification
The 3 months correlation between Visa and CPPCY is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CP All PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP All PCL 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 CP All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP All PCL has no effect on the direction of Visa i.e., Visa and CP All go up and down completely randomly.
Pair Corralation between Visa and CP All
Taking into account the 90-day investment horizon Visa is expected to generate 1.32 times less return on investment than CP All. But when comparing it to its historical volatility, Visa Class A is 2.04 times less risky than CP All. It trades about 0.34 of its potential returns per unit of risk. CP All PCL is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,711 in CP All PCL on September 2, 2024 and sell it today you would earn a total of 189.00 from holding CP All PCL or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. CP All PCL
Performance |
| Timeline |
| Visa Class A |
| CP All PCL |
Visa and CP All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CP All
The main advantage of trading using opposite Visa and CP All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CP All 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 CP All will offset losses from the drop in CP All's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| CP All vs. Carrefour SA PK | CP All vs. J Sainsbury PLC | CP All vs. Sendas Distribuidora SA | CP All vs. Weis Markets |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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