Correlation Between Visa and Altagas
Can any of the company-specific risk be diversified away by investing in both Visa and Altagas 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 Altagas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc CDR and Altagas Ltd Pref, you can compare the effects of market volatilities on Visa and Altagas 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 Altagas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Altagas.
Diversification Opportunities for Visa and Altagas
Very good diversification
The 3 months correlation between Visa and Altagas is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc CDR and Altagas Ltd Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Pref 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 Inc CDR are associated (or correlated) with Altagas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Pref has no effect on the direction of Visa i.e., Visa and Altagas go up and down completely randomly.
Pair Corralation between Visa and Altagas
Assuming the 90 days trading horizon Visa Inc CDR is expected to generate 2.15 times more return on investment than Altagas. However, Visa is 2.15 times more volatile than Altagas Ltd Pref. It trades about 0.32 of its potential returns per unit of risk. Altagas Ltd Pref is currently generating about 0.06 per unit of risk. If you would invest 2,693 in Visa Inc CDR on August 25, 2024 and sell it today you would earn a total of 255.00 from holding Visa Inc CDR or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Inc CDR vs. Altagas Ltd Pref
Performance |
| Timeline |
| Visa Inc CDR |
| Altagas Pref |
Visa and Altagas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Altagas
The main advantage of trading using opposite Visa and Altagas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Altagas 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 Altagas will offset losses from the drop in Altagas' long position.| Visa vs. Bird Construction | Visa vs. Dream Industrial Real | Visa vs. Nicola Mining | Visa vs. Altair Resources |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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