Correlation Between Visa and Elbit Medical
Can any of the company-specific risk be diversified away by investing in both Visa and Elbit Medical 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 Elbit Medical 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 Elbit Medical Technologies, you can compare the effects of market volatilities on Visa and Elbit Medical 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 Elbit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Elbit Medical.
Diversification Opportunities for Visa and Elbit Medical
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Elbit is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Elbit Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Medical Techno 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 Elbit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Medical Techno has no effect on the direction of Visa i.e., Visa and Elbit Medical go up and down completely randomly.
Pair Corralation between Visa and Elbit Medical
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.18 times more return on investment than Elbit Medical. However, Visa Class A is 5.64 times less risky than Elbit Medical. It trades about 0.09 of its potential returns per unit of risk. Elbit Medical Technologies is currently generating about -0.03 per unit of risk. If you would invest 20,586 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 10,406 from holding Visa Class A or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.35% |
| Values | Daily Returns |
Visa Class A vs. Elbit Medical Technologies
Performance |
| Timeline |
| Visa Class A |
| Elbit Medical Techno |
Visa and Elbit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Elbit Medical
The main advantage of trading using opposite Visa and Elbit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Elbit Medical 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 Elbit Medical will offset losses from the drop in Elbit Medical's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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