Correlation Between Visa and Major Cineplex
Can any of the company-specific risk be diversified away by investing in both Visa and Major Cineplex 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 Major Cineplex 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 Major Cineplex Lifestyle, you can compare the effects of market volatilities on Visa and Major Cineplex 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 Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Major Cineplex.
Diversification Opportunities for Visa and Major Cineplex
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Major is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle 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 Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Visa i.e., Visa and Major Cineplex go up and down completely randomly.
Pair Corralation between Visa and Major Cineplex
Taking into account the 90-day investment horizon Visa is expected to generate 28.17 times less return on investment than Major Cineplex. But when comparing it to its historical volatility, Visa Class A is 50.79 times less risky than Major Cineplex. It trades about 0.08 of its potential returns per unit of risk. Major Cineplex Lifestyle is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Major Cineplex Lifestyle on August 31, 2024 and sell it today you would earn a total of 36.00 from holding Major Cineplex Lifestyle or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.46% |
| Values | Daily Returns |
Visa Class A vs. Major Cineplex Lifestyle
Performance |
| Timeline |
| Visa Class A |
| Major Cineplex Lifestyle |
Visa and Major Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Major Cineplex
The main advantage of trading using opposite Visa and Major Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Major Cineplex 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 Major Cineplex will offset losses from the drop in Major Cineplex'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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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