Correlation Between Visa and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Visa and Templeton Global 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 Templeton Global 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 Templeton Global Balanced, you can compare the effects of market volatilities on Visa and Templeton Global 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 Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Templeton Global.
Diversification Opportunities for Visa and Templeton Global
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Templeton is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Templeton Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Balanced 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Balanced has no effect on the direction of Visa i.e., Visa and Templeton Global go up and down completely randomly.
Pair Corralation between Visa and Templeton Global
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.59 times more return on investment than Templeton Global. However, Visa is 1.59 times more volatile than Templeton Global Balanced. It trades about 0.14 of its potential returns per unit of risk. Templeton Global Balanced is currently generating about 0.15 per unit of risk. If you would invest 30,978 in Visa Class A on October 19, 2024 and sell it today you would earn a total of 747.00 from holding Visa Class A or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Templeton Global Balanced
Performance |
| Timeline |
| Visa Class A |
| Templeton Global Balanced |
Visa and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Templeton Global
The main advantage of trading using opposite Visa and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Templeton Global 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 Templeton Global will offset losses from the drop in Templeton Global'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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