Correlation Between Visa and Crédit Agricole
Can any of the company-specific risk be diversified away by investing in both Visa and Crédit Agricole 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 Crédit Agricole 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 Crdit Agricole SA, you can compare the effects of market volatilities on Visa and Crédit Agricole 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 Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Crédit Agricole.
Diversification Opportunities for Visa and Crédit Agricole
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Crédit is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Visa i.e., Visa and Crédit Agricole go up and down completely randomly.
Pair Corralation between Visa and Crédit Agricole
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.75 times more return on investment than Crédit Agricole. However, Visa Class A is 1.33 times less risky than Crédit Agricole. It trades about 0.09 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about -0.04 per unit of risk. If you would invest 27,110 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 4,398 from holding Visa Class A or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
Visa Class A vs. Crdit Agricole SA
Performance |
| Timeline |
| Visa Class A |
| Crdit Agricole SA |
Visa and Crédit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Crédit Agricole
The main advantage of trading using opposite Visa and Crédit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Crédit Agricole 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 Crédit Agricole will offset losses from the drop in Crédit Agricole's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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