Correlation Between Visa and Power Finance
Can any of the company-specific risk be diversified away by investing in both Visa and Power Finance 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 Power Finance 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 Power Finance, you can compare the effects of market volatilities on Visa and Power Finance 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 Power Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Power Finance.
Diversification Opportunities for Visa and Power Finance
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Power is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Power Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Finance 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 Power Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Finance has no effect on the direction of Visa i.e., Visa and Power Finance go up and down completely randomly.
Pair Corralation between Visa and Power Finance
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.43 times more return on investment than Power Finance. However, Visa Class A is 2.35 times less risky than Power Finance. It trades about 0.36 of its potential returns per unit of risk. Power Finance is currently generating about 0.14 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 Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Visa Class A vs. Power Finance
Performance |
| Timeline |
| Visa Class A |
| Power Finance |
Visa and Power Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Power Finance
The main advantage of trading using opposite Visa and Power Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Power Finance 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 Power Finance will offset losses from the drop in Power Finance's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Power Finance vs. Shemaroo Entertainment Limited | Power Finance vs. Hindustan Media Ventures | Power Finance vs. JGCHEMICALS LIMITED | Power Finance vs. Thirumalai Chemicals Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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