Correlation Between Visa and BMO Long
Can any of the company-specific risk be diversified away by investing in both Visa and BMO Long 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 BMO Long 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 BMO Long Corporate, you can compare the effects of market volatilities on Visa and BMO Long 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 BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BMO Long.
Diversification Opportunities for Visa and BMO Long
Average diversification
The 3 months correlation between Visa and BMO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BMO Long Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Corporate 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 BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Corporate has no effect on the direction of Visa i.e., Visa and BMO Long go up and down completely randomly.
Pair Corralation between Visa and BMO Long
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.59 times more return on investment than BMO Long. However, Visa is 1.59 times more volatile than BMO Long Corporate. It trades about 0.44 of its potential returns per unit of risk. BMO Long Corporate is currently generating about 0.08 per unit of risk. If you would invest 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. BMO Long Corporate
Performance |
| Timeline |
| Visa Class A |
| BMO Long Corporate |
Visa and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BMO Long
The main advantage of trading using opposite Visa and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BMO Long 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 BMO Long will offset losses from the drop in BMO Long's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BMO Long vs. BMO Mid Corporate | BMO Long vs. BMO Short Corporate | BMO Long vs. BMO High Yield | BMO Long vs. BMO Long Provincial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |