Correlation Between Visa and Hermes International
Can any of the company-specific risk be diversified away by investing in both Visa and Hermes International 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 Hermes International 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 Hermes International SCA, you can compare the effects of market volatilities on Visa and Hermes International 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 Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hermes International.
Diversification Opportunities for Visa and Hermes International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Hermes is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA 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 Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Visa i.e., Visa and Hermes International go up and down completely randomly.
Pair Corralation between Visa and Hermes International
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.8 times more return on investment than Hermes International. However, Visa Class A is 1.25 times less risky than Hermes International. It trades about 0.33 of its potential returns per unit of risk. Hermes International SCA is currently generating about -0.14 per unit of risk. If you would invest 28,365 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 2,627 from holding Visa Class A or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Hermes International SCA
Performance |
| Timeline |
| Visa Class A |
| Hermes International SCA |
Visa and Hermes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hermes International
The main advantage of trading using opposite Visa and Hermes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Hermes International 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 Hermes International will offset losses from the drop in Hermes International's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Hermes International vs. Kering SA | Hermes International vs. LVMH Mot Hennessy | Hermes International vs. LOreal SA | Hermes International vs. Christian Dior SE |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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