Correlation Between Visa and Critical Elements
Can any of the company-specific risk be diversified away by investing in both Visa and Critical Elements 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 Critical Elements 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 Critical Elements, you can compare the effects of market volatilities on Visa and Critical Elements 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 Critical Elements. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Critical Elements.
Diversification Opportunities for Visa and Critical Elements
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Critical is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements 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 Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of Visa i.e., Visa and Critical Elements go up and down completely randomly.
Pair Corralation between Visa and Critical Elements
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.31 times more return on investment than Critical Elements. However, Visa Class A is 3.18 times less risky than Critical Elements. It trades about 0.35 of its potential returns per unit of risk. Critical Elements is currently generating about -0.42 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Critical Elements
Performance |
| Timeline |
| Visa Class A |
| Critical Elements |
Visa and Critical Elements Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Critical Elements
The main advantage of trading using opposite Visa and Critical Elements positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Critical Elements 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 Critical Elements will offset losses from the drop in Critical Elements' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Critical Elements vs. Argosy Minerals Limited | Critical Elements vs. Aurelia Metals Limited | Critical Elements vs. Artemis Resources | Critical Elements vs. Ascendant Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |