Correlation Between Visa and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Visa and Sumitomo Electric 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 Sumitomo Electric 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 Sumitomo Electric Industries, you can compare the effects of market volatilities on Visa and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sumitomo Electric.
Diversification Opportunities for Visa and Sumitomo Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Sumitomo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Visa i.e., Visa and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Visa and Sumitomo Electric
If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Sumitomo Electric Industries
Performance |
| Timeline |
| Visa Class A |
| Sumitomo Electric |
Visa and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sumitomo Electric
The main advantage of trading using opposite Visa and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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