Correlation Between Visa and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Visa and Telecom Argentina 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 Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on Visa and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Telecom Argentina.
Diversification Opportunities for Visa and Telecom Argentina
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Telecom is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Visa i.e., Visa and Telecom Argentina go up and down completely randomly.
Pair Corralation between Visa and Telecom Argentina
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.22 times more return on investment than Telecom Argentina. However, Visa Class A is 4.57 times less risky than Telecom Argentina. It trades about 0.66 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about -0.1 per unit of risk. If you would invest 31,908 in Visa Class A on November 18, 2024 and sell it today you would earn a total of 3,473 from holding Visa Class A or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Telecom Argentina SA
Performance |
| Timeline |
| Visa Class A |
| Telecom Argentina |
Visa and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Telecom Argentina
The main advantage of trading using opposite Visa and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB | Telecom Argentina vs. KT Corporation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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