Correlation Between Visa and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Visa and Eiffage SA 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 Eiffage SA 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 Eiffage SA ADR, you can compare the effects of market volatilities on Visa and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Eiffage SA.
Diversification Opportunities for Visa and Eiffage SA
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Eiffage is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Eiffage SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA ADR 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA ADR has no effect on the direction of Visa i.e., Visa and Eiffage SA go up and down completely randomly.
Pair Corralation between Visa and Eiffage SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Eiffage SA. However, Visa Class A is 2.27 times less risky than Eiffage SA. It trades about 0.34 of its potential returns per unit of risk. Eiffage SA ADR is currently generating about -0.12 per unit of risk. If you would invest 29,129 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 2,536 from holding Visa Class A or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Eiffage SA ADR
Performance |
| Timeline |
| Visa Class A |
| Eiffage SA ADR |
Visa and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Eiffage SA
The main advantage of trading using opposite Visa and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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