Correlation Between Visa and Kraft Bank
Can any of the company-specific risk be diversified away by investing in both Visa and Kraft Bank 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 Kraft Bank 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 Kraft Bank Asa, you can compare the effects of market volatilities on Visa and Kraft Bank 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 Kraft Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Kraft Bank.
Diversification Opportunities for Visa and Kraft Bank
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Kraft is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kraft Bank Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Bank Asa 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 Kraft Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Bank Asa has no effect on the direction of Visa i.e., Visa and Kraft Bank go up and down completely randomly.
Pair Corralation between Visa and Kraft Bank
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.46 times more return on investment than Kraft Bank. However, Visa Class A is 2.19 times less risky than Kraft Bank. It trades about 0.35 of its potential returns per unit of risk. Kraft Bank Asa is currently generating about -0.02 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Kraft Bank Asa
Performance |
| Timeline |
| Visa Class A |
| Kraft Bank Asa |
Visa and Kraft Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Kraft Bank
The main advantage of trading using opposite Visa and Kraft Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Kraft Bank 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 Kraft Bank will offset losses from the drop in Kraft Bank's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Kraft Bank vs. Romerike Sparebank | Kraft Bank vs. Nidaros Sparebank | Kraft Bank vs. Odfjell Drilling | Kraft Bank vs. Helgeland Sparebank |
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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