Correlation Between Visa and Jardine Matheson
Can any of the company-specific risk be diversified away by investing in both Visa and Jardine Matheson 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 Jardine Matheson 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 Jardine Matheson Holdings, you can compare the effects of market volatilities on Visa and Jardine Matheson 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 Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jardine Matheson.
Diversification Opportunities for Visa and Jardine Matheson
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Jardine is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Visa i.e., Visa and Jardine Matheson go up and down completely randomly.
Pair Corralation between Visa and Jardine Matheson
Taking into account the 90-day investment horizon Visa is expected to generate 1.33 times less return on investment than Jardine Matheson. But when comparing it to its historical volatility, Visa Class A is 1.04 times less risky than Jardine Matheson. It trades about 0.33 of its potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 3,917 in Jardine Matheson Holdings on September 3, 2024 and sell it today you would earn a total of 431.00 from holding Jardine Matheson Holdings or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Jardine Matheson Holdings
Performance |
| Timeline |
| Visa Class A |
| Jardine Matheson Holdings |
Visa and Jardine Matheson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Jardine Matheson
The main advantage of trading using opposite Visa and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Jardine Matheson vs. Swire Pacific Ltd | Jardine Matheson vs. CITIC Limited | Jardine Matheson vs. Fosun International | Jardine Matheson vs. Cibl Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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