Correlation Between Visa and Infosys
Can any of the company-specific risk be diversified away by investing in both Visa and Infosys 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 Infosys 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 Infosys Limited, you can compare the effects of market volatilities on Visa and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Infosys.
Diversification Opportunities for Visa and Infosys
Very weak diversification
The 3 months correlation between Visa and Infosys is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of Visa i.e., Visa and Infosys go up and down completely randomly.
Pair Corralation between Visa and Infosys
Taking into account the 90-day investment horizon Visa is expected to generate 1.69 times less return on investment than Infosys. But when comparing it to its historical volatility, Visa Class A is 2.37 times less risky than Infosys. It trades about 0.07 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,621 in Infosys Limited on October 23, 2024 and sell it today you would earn a total of 1,896 from holding Infosys Limited or generate 41.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.06% |
| Values | Daily Returns |
Visa Class A vs. Infosys Limited
Performance |
| Timeline |
| Visa Class A |
| Infosys Limited |
Visa and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Infosys
The main advantage of trading using opposite Visa and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Infosys vs. Annaly Capital Management, | Infosys vs. Fresenius Medical Care | Infosys vs. Take Two Interactive Software | Infosys vs. Molson Coors Beverage |
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 CEOs Directory module to screen CEOs from public companies around the world.
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