Correlation Between Visa and VP Bank
Can any of the company-specific risk be diversified away by investing in both Visa and VP Bank 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 VP Bank 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 VP Bank AG, you can compare the effects of market volatilities on Visa and VP Bank 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 VP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and VP Bank.
Diversification Opportunities for Visa and VP Bank
Average diversification
The 3 months correlation between Visa and VPBN is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG 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 VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Visa i.e., Visa and VP Bank go up and down completely randomly.
Pair Corralation between Visa and VP Bank
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.88 times more return on investment than VP Bank. However, Visa Class A is 1.14 times less risky than VP Bank. It trades about 0.11 of its potential returns per unit of risk. VP Bank AG is currently generating about -0.05 per unit of risk. If you would invest 26,932 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.45% |
| Values | Daily Returns |
Visa Class A vs. VP Bank AG
Performance |
| Timeline |
| Visa Class A |
| VP Bank AG |
Visa and VP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and VP Bank
The main advantage of trading using opposite Visa and VP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, VP Bank 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 VP Bank will offset losses from the drop in VP Bank's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| VP Bank vs. Swissquote Group Holding | VP Bank vs. Banque Cantonale | VP Bank vs. Barry Callebaut AG | VP Bank vs. Vontobel Holding |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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