Correlation Between Visa and Compagnie
Can any of the company-specific risk be diversified away by investing in both Visa and Compagnie 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 Compagnie 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 Compagnie de Saint Gobain, you can compare the effects of market volatilities on Visa and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Compagnie.
Diversification Opportunities for Visa and Compagnie
Poor diversification
The 3 months correlation between Visa and Compagnie is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Visa i.e., Visa and Compagnie go up and down completely randomly.
Pair Corralation between Visa and Compagnie
Taking into account the 90-day investment horizon Visa is expected to generate 1.73 times less return on investment than Compagnie. But when comparing it to its historical volatility, Visa Class A is 1.52 times less risky than Compagnie. It trades about 0.09 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,323 in Compagnie de Saint Gobain on August 27, 2024 and sell it today you would earn a total of 4,427 from holding Compagnie de Saint Gobain or generate 102.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.22% |
| Values | Daily Returns |
Visa Class A vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Visa Class A |
| Compagnie de Saint |
Visa and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Compagnie
The main advantage of trading using opposite Visa and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |