Correlation Between Visa and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both Visa and Lollands 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 Lollands 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 Lollands Bank, you can compare the effects of market volatilities on Visa and Lollands 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 Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lollands Bank.
Diversification Opportunities for Visa and Lollands Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Lollands is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank 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 Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of Visa i.e., Visa and Lollands Bank go up and down completely randomly.
Pair Corralation between Visa and Lollands Bank
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.99 times more return on investment than Lollands Bank. However, Visa Class A is 1.01 times less risky than Lollands Bank. It trades about 0.04 of its potential returns per unit of risk. Lollands Bank is currently generating about -0.25 per unit of risk. If you would invest 32,855 in Visa Class A on January 12, 2025 and sell it today you would earn a total of 485.00 from holding Visa Class A or generate 1.48% 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. Lollands Bank
Performance |
| Timeline |
| Visa Class A |
| Lollands Bank |
Visa and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lollands Bank
The main advantage of trading using opposite Visa and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lollands 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 Lollands Bank will offset losses from the drop in Lollands Bank's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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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