Correlation Between Visa and Intershop Holding
Can any of the company-specific risk be diversified away by investing in both Visa and Intershop Holding 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 Intershop Holding 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 Intershop Holding AG, you can compare the effects of market volatilities on Visa and Intershop Holding 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 Intershop Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Intershop Holding.
Diversification Opportunities for Visa and Intershop Holding
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Intershop is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Intershop Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intershop Holding 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 Intershop Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intershop Holding has no effect on the direction of Visa i.e., Visa and Intershop Holding go up and down completely randomly.
Pair Corralation between Visa and Intershop Holding
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.29 times more return on investment than Intershop Holding. However, Visa is 1.29 times more volatile than Intershop Holding AG. It trades about 0.09 of its potential returns per unit of risk. Intershop Holding AG is currently generating about 0.03 per unit of risk. If you would invest 20,975 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 10,533 from holding Visa Class A or generate 50.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Class A vs. Intershop Holding AG
Performance |
| Timeline |
| Visa Class A |
| Intershop Holding |
Visa and Intershop Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Intershop Holding
The main advantage of trading using opposite Visa and Intershop Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Intershop Holding 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 Intershop Holding will offset losses from the drop in Intershop Holding's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Intershop Holding vs. Allreal Holding | Intershop Holding vs. Mobimo Hldg | Intershop Holding vs. PSP Swiss Property | Intershop Holding vs. Swiss Prime Site |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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