Correlation Between Visa and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Visa and Carnival Plc 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 Carnival Plc 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 Carnival plc, you can compare the effects of market volatilities on Visa and Carnival Plc 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 Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Carnival Plc.
Diversification Opportunities for Visa and Carnival Plc
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Carnival is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Carnival plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival plc 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 Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival plc has no effect on the direction of Visa i.e., Visa and Carnival Plc go up and down completely randomly.
Pair Corralation between Visa and Carnival Plc
Taking into account the 90-day investment horizon Visa is expected to generate 3.02 times less return on investment than Carnival Plc. But when comparing it to its historical volatility, Visa Class A is 2.29 times less risky than Carnival Plc. It trades about 0.1 of its potential returns per unit of risk. Carnival plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,551 in Carnival plc on September 2, 2024 and sell it today you would earn a total of 867.00 from holding Carnival plc or generate 55.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.92% |
| Values | Daily Returns |
Visa Class A vs. Carnival plc
Performance |
| Timeline |
| Visa Class A |
| Carnival plc |
Visa and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Carnival Plc
The main advantage of trading using opposite Visa and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Carnival Plc vs. Li Ning Company | Carnival Plc vs. Trip Group Limited | Carnival Plc vs. Superior Plus Corp | Carnival Plc vs. NMI 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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