Correlation Between Visa and Komatsu
Can any of the company-specific risk be diversified away by investing in both Visa and Komatsu 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 Komatsu 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 Komatsu, you can compare the effects of market volatilities on Visa and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Komatsu.
Diversification Opportunities for Visa and Komatsu
Good diversification
The 3 months correlation between Visa and Komatsu is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Visa i.e., Visa and Komatsu go up and down completely randomly.
Pair Corralation between Visa and Komatsu
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Komatsu. However, Visa Class A is 2.26 times less risky than Komatsu. It trades about 0.37 of its potential returns per unit of risk. Komatsu is currently generating about 0.01 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Komatsu
Performance |
| Timeline |
| Visa Class A |
| Komatsu |
Visa and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Komatsu
The main advantage of trading using opposite Visa and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Komatsu vs. Gencor Industries | Komatsu vs. Rev Group | Komatsu vs. Manitowoc | Komatsu vs. Columbus McKinnon |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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