Correlation Between Visa and Wesure Global
Can any of the company-specific risk be diversified away by investing in both Visa and Wesure 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 Wesure 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 Wesure Global Tech, you can compare the effects of market volatilities on Visa and Wesure 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 Wesure Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Wesure Global.
Diversification Opportunities for Visa and Wesure Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Wesure is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Wesure Global Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesure Global Tech 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 Wesure Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesure Global Tech has no effect on the direction of Visa i.e., Visa and Wesure Global go up and down completely randomly.
Pair Corralation between Visa and Wesure Global
Taking into account the 90-day investment horizon Visa is expected to generate 3.33 times less return on investment than Wesure Global. But when comparing it to its historical volatility, Visa Class A is 2.22 times less risky than Wesure Global. It trades about 0.35 of its potential returns per unit of risk. Wesure Global Tech is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 39,080 in Wesure Global Tech on September 1, 2024 and sell it today you would earn a total of 10,660 from holding Wesure Global Tech or generate 27.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Visa Class A vs. Wesure Global Tech
Performance |
| Timeline |
| Visa Class A |
| Wesure Global Tech |
Visa and Wesure Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Wesure Global
The main advantage of trading using opposite Visa and Wesure Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Wesure 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 Wesure Global will offset losses from the drop in Wesure 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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