Correlation Between Visa and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Visa and Voestalpine 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 Voestalpine 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 Voestalpine AG PK, you can compare the effects of market volatilities on Visa and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Voestalpine.
Diversification Opportunities for Visa and Voestalpine
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Voestalpine is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Voestalpine AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG PK 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG PK has no effect on the direction of Visa i.e., Visa and Voestalpine go up and down completely randomly.
Pair Corralation between Visa and Voestalpine
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Voestalpine. However, Visa Class A is 2.9 times less risky than Voestalpine. It trades about 0.09 of its potential returns per unit of risk. Voestalpine AG PK is currently generating about 0.0 per unit of risk. If you would invest 20,485 in Visa Class A on September 19, 2024 and sell it today you would earn a total of 11,345 from holding Visa Class A or generate 55.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Voestalpine AG PK
Performance |
| Timeline |
| Visa Class A |
| Voestalpine AG PK |
Visa and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Voestalpine
The main advantage of trading using opposite Visa and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.The idea behind Visa Class A and Voestalpine AG PK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Voestalpine vs. Gerdau SA ADR | Voestalpine vs. Usinas Siderurgicas de | Voestalpine vs. Ternium SA ADR | Voestalpine vs. POSCO 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |