Correlation Between Visa and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Visa and Lonza Group 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 Lonza Group 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 Lonza Group AG, you can compare the effects of market volatilities on Visa and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lonza Group.
Diversification Opportunities for Visa and Lonza Group
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Lonza is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Visa i.e., Visa and Lonza Group go up and down completely randomly.
Pair Corralation between Visa and Lonza Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.48 times more return on investment than Lonza Group. However, Visa Class A is 2.1 times less risky than Lonza Group. It trades about 0.09 of its potential returns per unit of risk. Lonza Group AG is currently generating about 0.03 per unit of risk. If you would invest 20,975 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 10,690 from holding Visa Class A or generate 50.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lonza Group AG
Performance |
| Timeline |
| Visa Class A |
| Lonza Group AG |
Visa and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lonza Group
The main advantage of trading using opposite Visa and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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