Correlation Between Visa and Bilfinger
Can any of the company-specific risk be diversified away by investing in both Visa and Bilfinger 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 Bilfinger 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 Bilfinger SE, you can compare the effects of market volatilities on Visa and Bilfinger 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 Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bilfinger.
Diversification Opportunities for Visa and Bilfinger
Excellent diversification
The 3 months correlation between Visa and Bilfinger is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bilfinger SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE 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 Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE has no effect on the direction of Visa i.e., Visa and Bilfinger go up and down completely randomly.
Pair Corralation between Visa and Bilfinger
Taking into account the 90-day investment horizon Visa is expected to generate 2.39 times less return on investment than Bilfinger. But when comparing it to its historical volatility, Visa Class A is 2.47 times less risky than Bilfinger. It trades about 0.08 of its potential returns per unit of risk. Bilfinger SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,635 in Bilfinger SE on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Bilfinger SE or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. Bilfinger SE
Performance |
| Timeline |
| Visa Class A |
| Bilfinger SE |
Visa and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bilfinger
The main advantage of trading using opposite Visa and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Bilfinger vs. BOSTON BEER A | Bilfinger vs. United Breweries Co | Bilfinger vs. MagnaChip Semiconductor Corp | Bilfinger vs. Westinghouse Air Brake |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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