Correlation Between Visa and FBC HOLDINGS
Can any of the company-specific risk be diversified away by investing in both Visa and FBC HOLDINGS 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 FBC HOLDINGS 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 FBC HOLDINGS LIMITED, you can compare the effects of market volatilities on Visa and FBC HOLDINGS 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 FBC HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FBC HOLDINGS.
Diversification Opportunities for Visa and FBC HOLDINGS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and FBC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FBC HOLDINGS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FBC HOLDINGS LIMITED 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 FBC HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FBC HOLDINGS LIMITED has no effect on the direction of Visa i.e., Visa and FBC HOLDINGS go up and down completely randomly.
Pair Corralation between Visa and FBC HOLDINGS
Taking into account the 90-day investment horizon Visa is expected to generate 1.14 times less return on investment than FBC HOLDINGS. But when comparing it to its historical volatility, Visa Class A is 1.84 times less risky than FBC HOLDINGS. It trades about 0.33 of its potential returns per unit of risk. FBC HOLDINGS LIMITED is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 112,459 in FBC HOLDINGS LIMITED on August 27, 2024 and sell it today you would earn a total of 11,541 from holding FBC HOLDINGS LIMITED or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. FBC HOLDINGS LIMITED
Performance |
| Timeline |
| Visa Class A |
| FBC HOLDINGS LIMITED |
Visa and FBC HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FBC HOLDINGS
The main advantage of trading using opposite Visa and FBC HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, FBC HOLDINGS 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 FBC HOLDINGS will offset losses from the drop in FBC HOLDINGS's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| FBC HOLDINGS vs. STAR AFRICA PORATION | FBC HOLDINGS vs. CAFCA LIMITED | FBC HOLDINGS vs. FIRST MUTUAL PROPERTIES | FBC HOLDINGS vs. AFRICAN DISTILLERS LIMITED |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |