Correlation Between Visa and SGS SA
Can any of the company-specific risk be diversified away by investing in both Visa and SGS SA 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 SGS SA 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 SGS SA, you can compare the effects of market volatilities on Visa and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SGS SA.
Diversification Opportunities for Visa and SGS SA
Pay attention - limited upside
The 3 months correlation between Visa and SGS is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Visa i.e., Visa and SGS SA go up and down completely randomly.
Pair Corralation between Visa and SGS SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.75 times more return on investment than SGS SA. However, Visa Class A is 1.34 times less risky than SGS SA. It trades about 0.33 of its potential returns per unit of risk. SGS SA is currently generating about -0.2 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SGS SA
Performance |
| Timeline |
| Visa Class A |
| SGS SA |
Visa and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SGS SA
The main advantage of trading using opposite Visa and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| SGS SA vs. Daniels Corporate Advisory | SGS SA vs. AimRite Holdings Corp | SGS SA vs. Sack Lunch Productions | SGS SA vs. Dalrada Financial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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