Correlation Between Visa and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Visa and Outokumpu Oyj 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 Outokumpu Oyj 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 Outokumpu Oyj, you can compare the effects of market volatilities on Visa and Outokumpu Oyj 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 Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Outokumpu Oyj.
Diversification Opportunities for Visa and Outokumpu Oyj
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Outokumpu is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj 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 Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of Visa i.e., Visa and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Visa and Outokumpu Oyj
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.71 times more return on investment than Outokumpu Oyj. However, Visa is 1.71 times more volatile than Outokumpu Oyj. It trades about 0.1 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about -0.13 per unit of risk. If you would invest 27,135 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 4,373 from holding Visa Class A or generate 16.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Outokumpu Oyj
Performance |
| Timeline |
| Visa Class A |
| Outokumpu Oyj |
Visa and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Outokumpu Oyj
The main advantage of trading using opposite Visa and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Outokumpu Oyj 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Outokumpu Oyj vs. Western Sierra Mining | Outokumpu Oyj vs. Universal Display | Outokumpu Oyj vs. Paiute Oil Mining | Outokumpu Oyj vs. Mattel Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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