Correlation Between Visa and Tokio Marine
Can any of the company-specific risk be diversified away by investing in both Visa and Tokio Marine 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 Tokio Marine 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 Tokio Marine Holdings, you can compare the effects of market volatilities on Visa and Tokio Marine 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 Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Tokio Marine.
Diversification Opportunities for Visa and Tokio Marine
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Tokio is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of Visa i.e., Visa and Tokio Marine go up and down completely randomly.
Pair Corralation between Visa and Tokio Marine
Taking into account the 90-day investment horizon Visa is expected to generate 2.32 times less return on investment than Tokio Marine. But when comparing it to its historical volatility, Visa Class A is 2.25 times less risky than Tokio Marine. It trades about 0.08 of its potential returns per unit of risk. Tokio Marine Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,801 in Tokio Marine Holdings on August 29, 2024 and sell it today you would earn a total of 1,725 from holding Tokio Marine Holdings or generate 95.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.0% |
| Values | Daily Returns |
Visa Class A vs. Tokio Marine Holdings
Performance |
| Timeline |
| Visa Class A |
| Tokio Marine Holdings |
Visa and Tokio Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Tokio Marine
The main advantage of trading using opposite Visa and Tokio Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Tokio Marine 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 Tokio Marine will offset losses from the drop in Tokio Marine's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Tokio Marine vs. AECOM TECHNOLOGY | Tokio Marine vs. Jacquet Metal Service | Tokio Marine vs. FANDIFI TECHNOLOGY P | Tokio Marine vs. Amkor Technology |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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