Correlation Between Visa and Sweco AB
Can any of the company-specific risk be diversified away by investing in both Visa and Sweco AB 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 Sweco AB 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 Sweco AB, you can compare the effects of market volatilities on Visa and Sweco AB 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 Sweco AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sweco AB.
Diversification Opportunities for Visa and Sweco AB
Very good diversification
The 3 months correlation between Visa and Sweco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sweco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweco AB 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 Sweco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweco AB has no effect on the direction of Visa i.e., Visa and Sweco AB go up and down completely randomly.
Pair Corralation between Visa and Sweco AB
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.69 times more return on investment than Sweco AB. However, Visa Class A is 1.46 times less risky than Sweco AB. It trades about 0.22 of its potential returns per unit of risk. Sweco AB is currently generating about 0.03 per unit of risk. If you would invest 25,544 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 6,121 from holding Visa Class A or generate 23.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.7% |
| Values | Daily Returns |
Visa Class A vs. Sweco AB
Performance |
| Timeline |
| Visa Class A |
| Sweco AB |
Visa and Sweco AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sweco AB
The main advantage of trading using opposite Visa and Sweco AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sweco AB 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 Sweco AB will offset losses from the drop in Sweco AB's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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