Correlation Between Visa and Jerónimo Martins
Can any of the company-specific risk be diversified away by investing in both Visa and Jerónimo Martins 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 Jerónimo Martins 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 Jernimo Martins SGPS, you can compare the effects of market volatilities on Visa and Jerónimo Martins 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 Jerónimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jerónimo Martins.
Diversification Opportunities for Visa and Jerónimo Martins
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Jerónimo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS 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 Jerónimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of Visa i.e., Visa and Jerónimo Martins go up and down completely randomly.
Pair Corralation between Visa and Jerónimo Martins
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than Jerónimo Martins. However, Visa Class A is 1.71 times less risky than Jerónimo Martins. It trades about 0.56 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about 0.13 per unit of risk. If you would invest 31,167 in Visa Class A on November 8, 2024 and sell it today you would earn a total of 3,581 from holding Visa Class A or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. Jernimo Martins SGPS
Performance |
| Timeline |
| Visa Class A |
| Jernimo Martins SGPS |
Visa and Jerónimo Martins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Jerónimo Martins
The main advantage of trading using opposite Visa and Jerónimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Jerónimo Martins 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 Jerónimo Martins will offset losses from the drop in Jerónimo Martins' long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
| Jerónimo Martins vs. Nanjing Panda Electronics | Jerónimo Martins vs. KIMBALL ELECTRONICS | Jerónimo Martins vs. Meiko Electronics Co | Jerónimo Martins vs. Tsingtao Brewery |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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