Correlation Between Visa and Storebrand ASA
Can any of the company-specific risk be diversified away by investing in both Visa and Storebrand ASA 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 Storebrand ASA 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 Storebrand ASA, you can compare the effects of market volatilities on Visa and Storebrand ASA 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 Storebrand ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Storebrand ASA.
Diversification Opportunities for Visa and Storebrand ASA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Storebrand is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Storebrand ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand ASA 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 Storebrand ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand ASA has no effect on the direction of Visa i.e., Visa and Storebrand ASA go up and down completely randomly.
Pair Corralation between Visa and Storebrand ASA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.15 times more return on investment than Storebrand ASA. However, Visa is 1.15 times more volatile than Storebrand ASA. It trades about 0.1 of its potential returns per unit of risk. Storebrand ASA is currently generating about 0.08 per unit of risk. If you would invest 27,024 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 4,295 from holding Visa Class A or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Visa Class A vs. Storebrand ASA
Performance |
| Timeline |
| Visa Class A |
| Storebrand ASA |
Visa and Storebrand ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Storebrand ASA
The main advantage of trading using opposite Visa and Storebrand ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Storebrand ASA 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 Storebrand ASA will offset losses from the drop in Storebrand ASA's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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