Correlation Between Visa and International Petroleum
Can any of the company-specific risk be diversified away by investing in both Visa and International Petroleum 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 International Petroleum 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 International Petroleum, you can compare the effects of market volatilities on Visa and International Petroleum 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 International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and International Petroleum.
Diversification Opportunities for Visa and International Petroleum
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and International is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum 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 International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of Visa i.e., Visa and International Petroleum go up and down completely randomly.
Pair Corralation between Visa and International Petroleum
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than International Petroleum. However, Visa Class A is 1.97 times less risky than International Petroleum. It trades about 0.33 of its potential returns per unit of risk. International Petroleum is currently generating about -0.04 per unit of risk. If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. International Petroleum
Performance |
| Timeline |
| Visa Class A |
| International Petroleum |
Visa and International Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and International Petroleum
The main advantage of trading using opposite Visa and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, International Petroleum 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 International Petroleum will offset losses from the drop in International Petroleum's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| International Petroleum vs. 1st NRG Corp | International Petroleum vs. Otto Energy Limited | International Petroleum vs. Razor Energy Corp | International Petroleum vs. Prospera Energy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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