Correlation Between Visa and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Visa and Schibsted ASA 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 Schibsted ASA 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 Schibsted ASA A, you can compare the effects of market volatilities on Visa and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Schibsted ASA.
Diversification Opportunities for Visa and Schibsted ASA
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Schibsted is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Schibsted ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA A 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA A has no effect on the direction of Visa i.e., Visa and Schibsted ASA go up and down completely randomly.
Pair Corralation between Visa and Schibsted ASA
Taking into account the 90-day investment horizon Visa is expected to generate 3.41 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, Visa Class A is 3.33 times less risky than Schibsted ASA. It trades about 0.1 of its potential returns per unit of risk. Schibsted ASA A is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,066 in Schibsted ASA A on September 4, 2024 and sell it today you would earn a total of 2,088 from holding Schibsted ASA A or generate 195.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.9% |
| Values | Daily Returns |
Visa Class A vs. Schibsted ASA A
Performance |
| Timeline |
| Visa Class A |
| Schibsted ASA A |
Visa and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Schibsted ASA
The main advantage of trading using opposite Visa and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Schibsted ASA vs. Superior Plus Corp | Schibsted ASA vs. NMI Holdings | Schibsted ASA vs. Origin Agritech | Schibsted ASA vs. SIVERS SEMICONDUCTORS AB |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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