Correlation Between Visa and Alfa Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and Alfa Holdings 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 Alfa Holdings 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 Alfa Holdings SA, you can compare the effects of market volatilities on Visa and Alfa Holdings 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 Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Alfa Holdings.
Diversification Opportunities for Visa and Alfa Holdings
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Alfa is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA 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 Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Visa i.e., Visa and Alfa Holdings go up and down completely randomly.
Pair Corralation between Visa and Alfa Holdings
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.26 times more return on investment than Alfa Holdings. However, Visa Class A is 3.8 times less risky than Alfa Holdings. It trades about 0.34 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about -0.32 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Visa Class A vs. Alfa Holdings SA
Performance |
| Timeline |
| Visa Class A |
| Alfa Holdings SA |
Visa and Alfa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Alfa Holdings
The main advantage of trading using opposite Visa and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Alfa Holdings vs. Ambipar Participaes e | Alfa Holdings vs. Movida Participaes SA | Alfa Holdings vs. Banco BTG Pactual | Alfa Holdings vs. BTG Pactual Logstica |
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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