Correlation Between Visa and La Franaise

Can any of the company-specific risk be diversified away by investing in both Visa and La Franaise 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 La Franaise 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 La Franaise des, you can compare the effects of market volatilities on Visa and La Franaise 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 La Franaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and La Franaise.

Diversification Opportunities for Visa and La Franaise

-0.15

Correlation Coefficient

Visa  La Franaise

Good diversification

The 3 months correlation between Visa and 1WE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and La Franaise des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Franaise des 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 La Franaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Franaise des has no effect on the direction of Visa i.e., Visa and La Franaise go up and down completely randomly.

Pair Corralation between Visa and La Franaise

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.64 times more return on investment than La Franaise. However, Visa Class A is 1.56 times less risky than La Franaise. It trades about 0.21 of its potential returns per unit of risk. La Franaise des is currently generating about -0.03 per unit of risk. If you would invest  28,365  in Visa Class A on October 26, 2024 and sell it today you would earn a total of  3,991  from holding Visa Class A or generate 14.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Visa Class A  vs.  La Franaise des

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

La Franaise des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days La Franaise des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, La Franaise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and La Franaise

The main advantage of trading using opposite Visa and La Franaise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, La Franaise 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 La Franaise will offset losses from the drop in La Franaise's long position.

The idea behind Visa Class A and La Franaise des pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.