Correlation Between Visa and Ratio Oil
Can any of the company-specific risk be diversified away by investing in both Visa and Ratio Oil 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 Ratio Oil 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 Ratio Oil Explorations, you can compare the effects of market volatilities on Visa and Ratio Oil 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 Ratio Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ratio Oil.
Diversification Opportunities for Visa and Ratio Oil
Very poor diversification
The 3 months correlation between Visa and Ratio is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ratio Oil Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratio Oil Explorations 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 Ratio Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratio Oil Explorations has no effect on the direction of Visa i.e., Visa and Ratio Oil go up and down completely randomly.
Pair Corralation between Visa and Ratio Oil
Taking into account the 90-day investment horizon Visa is expected to generate 1.2 times less return on investment than Ratio Oil. But when comparing it to its historical volatility, Visa Class A is 1.02 times less risky than Ratio Oil. It trades about 0.35 of its potential returns per unit of risk. Ratio Oil Explorations is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 31,950 in Ratio Oil Explorations on September 1, 2024 and sell it today you would earn a total of 2,950 from holding Ratio Oil Explorations or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Visa Class A vs. Ratio Oil Explorations
Performance |
| Timeline |
| Visa Class A |
| Ratio Oil Explorations |
Visa and Ratio Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ratio Oil
The main advantage of trading using opposite Visa and Ratio Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ratio Oil 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 Ratio Oil will offset losses from the drop in Ratio Oil's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Ratio Oil vs. Nice | Ratio Oil vs. The Gold Bond | Ratio Oil vs. Bank Leumi Le Israel | Ratio Oil vs. ICL Israel Chemicals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |