Correlation Between Visa and Medical Packaging
Can any of the company-specific risk be diversified away by investing in both Visa and Medical Packaging 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 Medical Packaging 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 Medical Packaging, you can compare the effects of market volatilities on Visa and Medical Packaging 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 Medical Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Medical Packaging.
Diversification Opportunities for Visa and Medical Packaging
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Medical is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging 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 Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Visa i.e., Visa and Medical Packaging go up and down completely randomly.
Pair Corralation between Visa and Medical Packaging
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.47 times more return on investment than Medical Packaging. However, Visa Class A is 2.12 times less risky than Medical Packaging. It trades about 0.11 of its potential returns per unit of risk. Medical Packaging is currently generating about -0.29 per unit of risk. If you would invest 30,985 in Visa Class A on September 13, 2024 and sell it today you would earn a total of 554.50 from holding Visa Class A or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Visa Class A vs. Medical Packaging
Performance |
| Timeline |
| Visa Class A |
| Medical Packaging |
Visa and Medical Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Medical Packaging
The main advantage of trading using opposite Visa and Medical Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Medical Packaging 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 Medical Packaging will offset losses from the drop in Medical Packaging's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Medical Packaging vs. Orascom Financial Holding | Medical Packaging vs. Misr National Steel | Medical Packaging vs. Commercial International Bank Egypt | Medical Packaging vs. Fawry For Banking |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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