Correlation Between Visa and Securitas
Can any of the company-specific risk be diversified away by investing in both Visa and Securitas 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 Securitas 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 Securitas AB, you can compare the effects of market volatilities on Visa and Securitas 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 Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Securitas.
Diversification Opportunities for Visa and Securitas
Very poor diversification
The 3 months correlation between Visa and Securitas is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of Visa i.e., Visa and Securitas go up and down completely randomly.
Pair Corralation between Visa and Securitas
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.1 times more return on investment than Securitas. However, Visa is 1.1 times more volatile than Securitas AB. It trades about -0.11 of its potential returns per unit of risk. Securitas AB is currently generating about -0.18 per unit of risk. If you would invest 31,589 in Visa Class A on October 17, 2024 and sell it today you would lose (680.00) from holding Visa Class A or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Visa Class A vs. Securitas AB
Performance |
| Timeline |
| Visa Class A |
| Securitas AB |
Visa and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Securitas
The main advantage of trading using opposite Visa and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Securitas vs. DATANG INTL POW | Securitas vs. NTT DATA | Securitas vs. Adtalem Global Education | Securitas vs. betterU Education Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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