Correlation Between Visa and Oriental Land
Can any of the company-specific risk be diversified away by investing in both Visa and Oriental Land 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 Oriental Land 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 Oriental Land Co, you can compare the effects of market volatilities on Visa and Oriental Land 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 Oriental Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Oriental Land.
Diversification Opportunities for Visa and Oriental Land
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Oriental is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land 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 Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Visa i.e., Visa and Oriental Land go up and down completely randomly.
Pair Corralation between Visa and Oriental Land
Taking into account the 90-day investment horizon Visa is expected to generate 1.12 times less return on investment than Oriental Land. But when comparing it to its historical volatility, Visa Class A is 3.49 times less risky than Oriental Land. It trades about 0.1 of its potential returns per unit of risk. Oriental Land Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,778 in Oriental Land Co on November 9, 2024 and sell it today you would earn a total of 342.00 from holding Oriental Land Co or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.52% |
| Values | Daily Returns |
Visa Class A vs. Oriental Land Co
Performance |
| Timeline |
| Visa Class A |
| Oriental Land |
Visa and Oriental Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Oriental Land
The main advantage of trading using opposite Visa and Oriental Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Oriental Land 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 Oriental Land will offset losses from the drop in Oriental Land's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Oriental Land vs. GEELY AUTOMOBILE | Oriental Land vs. Fast Retailing Co | Oriental Land vs. RYU Apparel | Oriental Land vs. CARSALESCOM |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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