Correlation Between Visa and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings, you can compare the effects of market volatilities on Visa and Koppers Holdings 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 Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Koppers Holdings.
Diversification Opportunities for Visa and Koppers Holdings
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Koppers is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers 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 Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Visa i.e., Visa and Koppers Holdings go up and down completely randomly.
Pair Corralation between Visa and Koppers Holdings
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than Koppers Holdings. However, Visa Class A is 1.73 times less risky than Koppers Holdings. It trades about 0.19 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.02 per unit of risk. If you would invest 26,867 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 4,452 from holding Visa Class A or generate 16.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Koppers Holdings
Performance |
| Timeline |
| Visa Class A |
| Koppers Holdings |
Visa and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Koppers Holdings
The main advantage of trading using opposite Visa and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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