Correlation Between Visa and Sports Entertainment
Can any of the company-specific risk be diversified away by investing in both Visa and Sports Entertainment 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 Sports Entertainment 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 Sports Entertainment Group, you can compare the effects of market volatilities on Visa and Sports Entertainment 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 Sports Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sports Entertainment.
Diversification Opportunities for Visa and Sports Entertainment
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Sports is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Entertainment 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 Sports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Entertainment has no effect on the direction of Visa i.e., Visa and Sports Entertainment go up and down completely randomly.
Pair Corralation between Visa and Sports Entertainment
Taking into account the 90-day investment horizon Visa is expected to generate 2.54 times less return on investment than Sports Entertainment. But when comparing it to its historical volatility, Visa Class A is 4.89 times less risky than Sports Entertainment. It trades about 0.07 of its potential returns per unit of risk. Sports Entertainment Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Sports Entertainment Group on October 18, 2024 and sell it today you would earn a total of 2.00 from holding Sports Entertainment Group or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Visa Class A vs. Sports Entertainment Group
Performance |
| Timeline |
| Visa Class A |
| Sports Entertainment |
Visa and Sports Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sports Entertainment
The main advantage of trading using opposite Visa and Sports Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sports Entertainment 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 Sports Entertainment will offset losses from the drop in Sports Entertainment's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Sports Entertainment vs. Platinum Asset Management | Sports Entertainment vs. Aristocrat Leisure | Sports Entertainment vs. Viva Leisure | Sports Entertainment vs. Retail Food Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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