Correlation Between Visa and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Visa and G5 Entertainment 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 G5 Entertainment 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 G5 Entertainment publ, you can compare the effects of market volatilities on Visa and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and G5 Entertainment.
Diversification Opportunities for Visa and G5 Entertainment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and G5EN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and G5 Entertainment publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment publ 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment publ has no effect on the direction of Visa i.e., Visa and G5 Entertainment go up and down completely randomly.
Pair Corralation between Visa and G5 Entertainment
Taking into account the 90-day investment horizon Visa is expected to generate 1.2 times less return on investment than G5 Entertainment. But when comparing it to its historical volatility, Visa Class A is 1.59 times less risky than G5 Entertainment. It trades about 0.44 of its potential returns per unit of risk. G5 Entertainment publ is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 11,720 in G5 Entertainment publ on November 3, 2024 and sell it today you would earn a total of 1,280 from holding G5 Entertainment publ or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. G5 Entertainment publ
Performance |
| Timeline |
| Visa Class A |
| G5 Entertainment publ |
Visa and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and G5 Entertainment
The main advantage of trading using opposite Visa and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| G5 Entertainment vs. Stillfront Group AB | G5 Entertainment vs. Paradox Interactive AB | G5 Entertainment vs. Catena Media plc | G5 Entertainment vs. Betsson AB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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