Correlation Between Visa and Netcompany Group
Can any of the company-specific risk be diversified away by investing in both Visa and Netcompany 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 Netcompany 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 Netcompany Group AS, you can compare the effects of market volatilities on Visa and Netcompany 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 Netcompany Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Netcompany Group.
Diversification Opportunities for Visa and Netcompany Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Netcompany is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Netcompany Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcompany Group 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 Netcompany Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcompany Group has no effect on the direction of Visa i.e., Visa and Netcompany Group go up and down completely randomly.
Pair Corralation between Visa and Netcompany Group
Taking into account the 90-day investment horizon Visa is expected to generate 1.19 times less return on investment than Netcompany Group. But when comparing it to its historical volatility, Visa Class A is 1.9 times less risky than Netcompany Group. It trades about 0.27 of its potential returns per unit of risk. Netcompany Group AS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 30,780 in Netcompany Group AS on August 29, 2024 and sell it today you would earn a total of 4,820 from holding Netcompany Group AS or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Netcompany Group AS
Performance |
| Timeline |
| Visa Class A |
| Netcompany Group |
Visa and Netcompany Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Netcompany Group
The main advantage of trading using opposite Visa and Netcompany Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Netcompany 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 Netcompany Group will offset losses from the drop in Netcompany Group's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Netcompany Group vs. GN Store Nord | Netcompany Group vs. Ambu AS | Netcompany Group vs. ROCKWOOL International AS | Netcompany Group vs. Genmab AS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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