Correlation Between Visa and Central Retail
Can any of the company-specific risk be diversified away by investing in both Visa and Central Retail 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 Central Retail 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 Central Retail, you can compare the effects of market volatilities on Visa and Central Retail 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 Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Central Retail.
Diversification Opportunities for Visa and Central Retail
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Central is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail 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 Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Visa i.e., Visa and Central Retail go up and down completely randomly.
Pair Corralation between Visa and Central Retail
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.6 times more return on investment than Central Retail. However, Visa Class A is 1.66 times less risky than Central Retail. It trades about 0.41 of its potential returns per unit of risk. Central Retail is currently generating about 0.19 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% 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. Central Retail
Performance |
| Timeline |
| Visa Class A |
| Central Retail |
Visa and Central Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Central Retail
The main advantage of trading using opposite Visa and Central Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Central Retail 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 Central Retail will offset losses from the drop in Central Retail's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Central Retail vs. SCG PACKAGING PCL NVDR | Central Retail vs. CK Power Public | Central Retail vs. Thai Metal Drum | Central Retail vs. Country Group Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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