Correlation Between Visa and Soditech
Can any of the company-specific risk be diversified away by investing in both Visa and Soditech 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 Soditech 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 Soditech SA, you can compare the effects of market volatilities on Visa and Soditech 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 Soditech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Soditech.
Diversification Opportunities for Visa and Soditech
Significant diversification
The 3 months correlation between Visa and Soditech is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech 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 Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Visa i.e., Visa and Soditech go up and down completely randomly.
Pair Corralation between Visa and Soditech
Taking into account the 90-day investment horizon Visa is expected to generate 1.87 times less return on investment than Soditech. But when comparing it to its historical volatility, Visa Class A is 5.65 times less risky than Soditech. It trades about 0.08 of its potential returns per unit of risk. Soditech SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Soditech SA on August 25, 2024 and sell it today you would lose (8.00) from holding Soditech SA or give up 6.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Class A vs. Soditech SA
Performance |
| Timeline |
| Visa Class A |
| Soditech SA |
Visa and Soditech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Soditech
The main advantage of trading using opposite Visa and Soditech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Soditech 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 Soditech will offset losses from the drop in Soditech's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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