Correlation Between Visa and Next PLC
Can any of the company-specific risk be diversified away by investing in both Visa and Next PLC 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 Next PLC 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 Next PLC, you can compare the effects of market volatilities on Visa and Next PLC 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 Next PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Next PLC.
Diversification Opportunities for Visa and Next PLC
Excellent diversification
The 3 months correlation between Visa and Next is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Next PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next 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 Next PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next PLC has no effect on the direction of Visa i.e., Visa and Next PLC go up and down completely randomly.
Pair Corralation between Visa and Next PLC
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.97 times more return on investment than Next PLC. However, Visa Class A is 1.03 times less risky than Next PLC. It trades about 0.34 of its potential returns per unit of risk. Next PLC is currently generating about -0.1 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Next PLC
Performance |
| Timeline |
| Visa Class A |
| Next PLC |
Visa and Next PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Next PLC
The main advantage of trading using opposite Visa and Next PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Next PLC 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 Next PLC will offset losses from the drop in Next PLC's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Next PLC vs. Tungsten West PLC | Next PLC vs. Argo Group Limited | Next PLC vs. Hardide PLC | Next PLC vs. Versarien PLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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