Correlation Between Visa and CI ONE
Can any of the company-specific risk be diversified away by investing in both Visa and CI ONE 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 CI ONE 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 CI ONE Global, you can compare the effects of market volatilities on Visa and CI ONE 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 CI ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CI ONE.
Diversification Opportunities for Visa and CI ONE
Poor diversification
The 3 months correlation between Visa and ONEQ is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CI ONE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE Global 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 CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE Global has no effect on the direction of Visa i.e., Visa and CI ONE go up and down completely randomly.
Pair Corralation between Visa and CI ONE
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.6 times more return on investment than CI ONE. However, Visa is 1.6 times more volatile than CI ONE Global. It trades about 0.35 of its potential returns per unit of risk. CI ONE Global is currently generating about 0.21 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. CI ONE Global
Performance |
| Timeline |
| Visa Class A |
| CI ONE Global |
Visa and CI ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CI ONE
The main advantage of trading using opposite Visa and CI ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CI ONE 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 CI ONE will offset losses from the drop in CI ONE's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| CI ONE vs. Brompton Global Dividend | CI ONE vs. Brompton European Dividend | CI ONE vs. Brompton North American | CI ONE vs. Global Healthcare Income |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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