Correlation Between Visa and Gafisa SA
Can any of the company-specific risk be diversified away by investing in both Visa and Gafisa SA 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 Gafisa SA 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 Gafisa SA, you can compare the effects of market volatilities on Visa and Gafisa SA 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 Gafisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Gafisa SA.
Diversification Opportunities for Visa and Gafisa SA
Pay attention - limited upside
The 3 months correlation between Visa and Gafisa is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Gafisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gafisa SA 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 Gafisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gafisa SA has no effect on the direction of Visa i.e., Visa and Gafisa SA go up and down completely randomly.
Pair Corralation between Visa and Gafisa SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.22 times more return on investment than Gafisa SA. However, Visa Class A is 4.49 times less risky than Gafisa SA. It trades about 0.4 of its potential returns per unit of risk. Gafisa SA is currently generating about -0.09 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. Gafisa SA
Performance |
| Timeline |
| Visa Class A |
| Gafisa SA |
Visa and Gafisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Gafisa SA
The main advantage of trading using opposite Visa and Gafisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Gafisa SA 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 Gafisa SA will offset losses from the drop in Gafisa SA'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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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