Correlation Between Visa and Shaheen Insurance
Can any of the company-specific risk be diversified away by investing in both Visa and Shaheen Insurance 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 Shaheen Insurance 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 Shaheen Insurance, you can compare the effects of market volatilities on Visa and Shaheen Insurance 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 Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Shaheen Insurance.
Diversification Opportunities for Visa and Shaheen Insurance
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Shaheen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance 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 Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Visa i.e., Visa and Shaheen Insurance go up and down completely randomly.
Pair Corralation between Visa and Shaheen Insurance
Taking into account the 90-day investment horizon Visa is expected to generate 1.78 times less return on investment than Shaheen Insurance. But when comparing it to its historical volatility, Visa Class A is 1.94 times less risky than Shaheen Insurance. It trades about 0.36 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 475.00 in Shaheen Insurance on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Shaheen Insurance or generate 17.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Shaheen Insurance
Performance |
| Timeline |
| Visa Class A |
| Shaheen Insurance |
Visa and Shaheen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Shaheen Insurance
The main advantage of trading using opposite Visa and Shaheen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Shaheen Insurance 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 Shaheen Insurance will offset losses from the drop in Shaheen Insurance's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Shaheen Insurance vs. Sitara Chemical Industries | Shaheen Insurance vs. Ittehad Chemicals | Shaheen Insurance vs. 786 Investment Limited | Shaheen Insurance vs. JS Investments |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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