Correlation Between Visa and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Visa and Stora Enso 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 Stora Enso 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 Stora Enso Oyj, you can compare the effects of market volatilities on Visa and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Stora Enso.
Diversification Opportunities for Visa and Stora Enso
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Stora is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Visa i.e., Visa and Stora Enso go up and down completely randomly.
Pair Corralation between Visa and Stora Enso
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 | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Visa Class A vs. Stora Enso Oyj
Performance |
| Timeline |
| Visa Class A |
| Stora Enso Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Stora Enso
The main advantage of trading using opposite Visa and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Stora Enso vs. Nine Dragons Paper | Stora Enso vs. Canfor Pulp Products | Stora Enso vs. Mondi PLC ADR | Stora Enso vs. Clearwater Paper |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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