Correlation Between Visa and NCBA GROUP
Can any of the company-specific risk be diversified away by investing in both Visa and NCBA 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 NCBA 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 NCBA GROUP PLC, you can compare the effects of market volatilities on Visa and NCBA 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 NCBA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and NCBA GROUP.
Diversification Opportunities for Visa and NCBA GROUP
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and NCBA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and NCBA GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCBA GROUP PLC 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 NCBA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCBA GROUP PLC has no effect on the direction of Visa i.e., Visa and NCBA GROUP go up and down completely randomly.
Pair Corralation between Visa and NCBA GROUP
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than NCBA GROUP. However, Visa Class A is 1.97 times less risky than NCBA GROUP. It trades about 0.23 of its potential returns per unit of risk. NCBA GROUP PLC is currently generating about -0.04 per unit of risk. If you would invest 29,129 in Visa Class A on September 5, 2024 and sell it today you would earn a total of 1,861 from holding Visa Class A or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. NCBA GROUP PLC
Performance |
| Timeline |
| Visa Class A |
| NCBA GROUP PLC |
Visa and NCBA GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and NCBA GROUP
The main advantage of trading using opposite Visa and NCBA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, NCBA 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 NCBA GROUP will offset losses from the drop in NCBA GROUP'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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