Correlation Between Visa and Fraser
Can any of the company-specific risk be diversified away by investing in both Visa and Fraser 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 Fraser 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 Fraser and Neave, you can compare the effects of market volatilities on Visa and Fraser 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 Fraser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Fraser.
Diversification Opportunities for Visa and Fraser
Poor diversification
The 3 months correlation between Visa and Fraser is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fraser and Neave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fraser and Neave 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 Fraser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fraser and Neave has no effect on the direction of Visa i.e., Visa and Fraser go up and down completely randomly.
Pair Corralation between Visa and Fraser
If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% 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. Fraser and Neave
Performance |
| Timeline |
| Visa Class A |
| Fraser and Neave |
Visa and Fraser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Fraser
The main advantage of trading using opposite Visa and Fraser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Fraser 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 Fraser will offset losses from the drop in Fraser's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Fraser vs. Kellanova | Fraser vs. Lancaster Colony | Fraser vs. The A2 Milk | Fraser vs. Altavoz Entertainment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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