Correlation Between Visa and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Visa and WuXi AppTec 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 WuXi AppTec 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 WuXi AppTec Co, you can compare the effects of market volatilities on Visa and WuXi AppTec 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 WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and WuXi AppTec.
Diversification Opportunities for Visa and WuXi AppTec
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and WuXi is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Visa i.e., Visa and WuXi AppTec go up and down completely randomly.
Pair Corralation between Visa and WuXi AppTec
Taking into account the 90-day investment horizon Visa is expected to generate 4.05 times less return on investment than WuXi AppTec. But when comparing it to its historical volatility, Visa Class A is 5.5 times less risky than WuXi AppTec. It trades about 0.07 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 437.00 in WuXi AppTec Co on September 1, 2024 and sell it today you would earn a total of 118.00 from holding WuXi AppTec Co or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.92% |
| Values | Daily Returns |
Visa Class A vs. WuXi AppTec Co
Performance |
| Timeline |
| Visa Class A |
| WuXi AppTec |
Visa and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and WuXi AppTec
The main advantage of trading using opposite Visa and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| WuXi AppTec vs. Danaher | WuXi AppTec vs. Danaher | WuXi AppTec vs. SIEMENS HEALTH ADR050 | WuXi AppTec vs. DexCom Inc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |