Correlation Between Visa and Sony
Can any of the company-specific risk be diversified away by investing in both Visa and Sony 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 Sony 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 Sony Group, you can compare the effects of market volatilities on Visa and Sony 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 Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sony.
Diversification Opportunities for Visa and Sony
Very weak diversification
The 3 months correlation between Visa and Sony is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Visa i.e., Visa and Sony go up and down completely randomly.
Pair Corralation between Visa and Sony
Taking into account the 90-day investment horizon Visa is expected to generate 2.11 times less return on investment than Sony. But when comparing it to its historical volatility, Visa Class A is 1.63 times less risky than Sony. It trades about 0.11 of its potential returns per unit of risk. Sony Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8,659 in Sony Group on September 1, 2024 and sell it today you would earn a total of 3,407 from holding Sony Group or generate 39.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Visa Class A vs. Sony Group
Performance |
| Timeline |
| Visa Class A |
| Sony Group |
Visa and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sony
The main advantage of trading using opposite Visa and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sony 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 Sony will offset losses from the drop in Sony's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Sony vs. Apartment Investment and | Sony vs. Fidelity National Information | Sony vs. Micron Technology | Sony vs. Ross Stores |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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