Correlation Between Visa and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both Visa and Jiangsu Expressway 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 Jiangsu Expressway 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 Jiangsu Expressway, you can compare the effects of market volatilities on Visa and Jiangsu Expressway 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 Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jiangsu Expressway.
Diversification Opportunities for Visa and Jiangsu Expressway
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Jiangsu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway 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 Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Visa i.e., Visa and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between Visa and Jiangsu Expressway
Taking into account the 90-day investment horizon Visa is expected to generate 5.9 times less return on investment than Jiangsu Expressway. But when comparing it to its historical volatility, Visa Class A is 7.41 times less risky than Jiangsu Expressway. It trades about 0.09 of its potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Jiangsu Expressway on August 28, 2024 and sell it today you would earn a total of 75.00 from holding Jiangsu Expressway or generate 500.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Visa Class A vs. Jiangsu Expressway
Performance |
| Timeline |
| Visa Class A |
| Jiangsu Expressway |
Visa and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Jiangsu Expressway
The main advantage of trading using opposite Visa and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Jiangsu Expressway vs. HomeToGo SE | Jiangsu Expressway vs. Taylor Morrison Home | Jiangsu Expressway vs. MI Homes | Jiangsu Expressway vs. Addus HomeCare |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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