Correlation Between Visa and Lyxor Ibex
Can any of the company-specific risk be diversified away by investing in both Visa and Lyxor Ibex 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 Lyxor Ibex 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 Lyxor Ibex 35, you can compare the effects of market volatilities on Visa and Lyxor Ibex 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 Lyxor Ibex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lyxor Ibex.
Diversification Opportunities for Visa and Lyxor Ibex
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Lyxor is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lyxor Ibex 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Ibex 35 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 Lyxor Ibex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Ibex 35 has no effect on the direction of Visa i.e., Visa and Lyxor Ibex go up and down completely randomly.
Pair Corralation between Visa and Lyxor Ibex
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.71 times more return on investment than Lyxor Ibex. However, Visa Class A is 1.4 times less risky than Lyxor Ibex. It trades about 0.1 of its potential returns per unit of risk. Lyxor Ibex 35 is currently generating about 0.03 per unit of risk. If you would invest 27,343 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 4,165 from holding Visa Class A or generate 15.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Visa Class A vs. Lyxor Ibex 35
Performance |
| Timeline |
| Visa Class A |
| Lyxor Ibex 35 |
Visa and Lyxor Ibex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lyxor Ibex
The main advantage of trading using opposite Visa and Lyxor Ibex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lyxor Ibex 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 Lyxor Ibex will offset losses from the drop in Lyxor Ibex's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Lyxor Ibex vs. Lyxor UCITS Ibex35 | Lyxor Ibex vs. Lyxor Ibex 35 | Lyxor Ibex vs. Metrovacesa SA | Lyxor Ibex vs. Endurance Motive SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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