Correlation Between Visa and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Visa and Grupo Financiero 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 Grupo Financiero 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 Grupo Financiero Banorte, you can compare the effects of market volatilities on Visa and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Grupo Financiero.
Diversification Opportunities for Visa and Grupo Financiero
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Grupo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Grupo Financiero Banorte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Banorte 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Banorte has no effect on the direction of Visa i.e., Visa and Grupo Financiero go up and down completely randomly.
Pair Corralation between Visa and Grupo Financiero
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Grupo Financiero. However, Visa Class A is 2.38 times less risky than Grupo Financiero. It trades about 0.08 of its potential returns per unit of risk. Grupo Financiero Banorte is currently generating about -0.01 per unit of risk. If you would invest 23,011 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 8,459 from holding Visa Class A or generate 36.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Grupo Financiero Banorte
Performance |
| Timeline |
| Visa Class A |
| Grupo Financiero Banorte |
Visa and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Grupo Financiero
The main advantage of trading using opposite Visa and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Grupo Financiero 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 Grupo Financiero will offset losses from the drop in Grupo Financiero's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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