Correlation Between Visa and OSRAM LICHT
Can any of the company-specific risk be diversified away by investing in both Visa and OSRAM LICHT 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 OSRAM LICHT 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 OSRAM LICHT N, you can compare the effects of market volatilities on Visa and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and OSRAM LICHT.
Diversification Opportunities for Visa and OSRAM LICHT
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and OSRAM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Visa i.e., Visa and OSRAM LICHT go up and down completely randomly.
Pair Corralation between Visa and OSRAM LICHT
Taking into account the 90-day investment horizon Visa Class A is expected to generate 6.26 times more return on investment than OSRAM LICHT. However, Visa is 6.26 times more volatile than OSRAM LICHT N. It trades about 0.36 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.17 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% 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. OSRAM LICHT N
Performance |
| Timeline |
| Visa Class A |
| OSRAM LICHT N |
Visa and OSRAM LICHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and OSRAM LICHT
The main advantage of trading using opposite Visa and OSRAM LICHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, OSRAM LICHT 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 OSRAM LICHT will offset losses from the drop in OSRAM LICHT's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| OSRAM LICHT vs. UNIVMUSIC GRPADR050 | OSRAM LICHT vs. UNITED RENTALS | OSRAM LICHT vs. Perseus Mining Limited | OSRAM LICHT vs. ALBIS LEASING AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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