Correlation Between Visa and Compagnie
Can any of the company-specific risk be diversified away by investing in both Visa and Compagnie 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 Compagnie 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 Compagnie Du Mont Blanc, you can compare the effects of market volatilities on Visa and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Compagnie.
Diversification Opportunities for Visa and Compagnie
Very weak diversification
The 3 months correlation between Visa and Compagnie is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Compagnie Du Mont Blanc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Du Mont 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Du Mont has no effect on the direction of Visa i.e., Visa and Compagnie go up and down completely randomly.
Pair Corralation between Visa and Compagnie
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.7 times more return on investment than Compagnie. However, Visa Class A is 1.43 times less risky than Compagnie. It trades about 0.34 of its potential returns per unit of risk. Compagnie Du Mont Blanc is currently generating about 0.09 per unit of risk. If you would invest 29,129 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 2,536 from holding Visa Class A or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Compagnie Du Mont Blanc
Performance |
| Timeline |
| Visa Class A |
| Compagnie Du Mont |
Visa and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Compagnie
The main advantage of trading using opposite Visa and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Compagnie vs. Trigano SA | Compagnie vs. SA Catana Group | Compagnie vs. Fountaine Pajo | Compagnie vs. Piscines Desjoyaux SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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