Correlation Between Visa and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Visa and Tomra Systems 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 Tomra Systems 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 Tomra Systems ASA, you can compare the effects of market volatilities on Visa and Tomra Systems 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 Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Tomra Systems.
Diversification Opportunities for Visa and Tomra Systems
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Tomra is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems 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 Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Visa i.e., Visa and Tomra Systems go up and down completely randomly.
Pair Corralation between Visa and Tomra Systems
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Tomra Systems. However, Visa Class A is 3.29 times less risky than Tomra Systems. It trades about 0.09 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.0 per unit of risk. If you would invest 20,588 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 10,594 from holding Visa Class A or generate 51.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.56% |
| Values | Daily Returns |
Visa Class A vs. Tomra Systems ASA
Performance |
| Timeline |
| Visa Class A |
| Tomra Systems ASA |
Visa and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Tomra Systems
The main advantage of trading using opposite Visa and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Tomra Systems vs. Waste Connections | Tomra Systems vs. Clean Harbors | Tomra Systems vs. Casella Waste Systems | Tomra Systems vs. Waste Management |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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