Correlation Between Visa and Davide Campari

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

Diversification Opportunities for Visa and Davide Campari

-0.87

Correlation Coefficient

Visa  Davide Campari

Pay attention - limited upside

The 3 months correlation between Visa and Davide is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Davide Campari Milano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davide Campari Milano 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 Davide Campari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davide Campari Milano has no effect on the direction of Visa i.e., Visa and Davide Campari go up and down completely randomly.

Pair Corralation between Visa and Davide Campari

Taking into account the 90-day investment horizon Visa is expected to generate 3.22 times less return on investment than Davide Campari. But when comparing it to its historical volatility, Visa Class A is 3.24 times less risky than Davide Campari. It trades about 0.13 of its potential returns per unit of risk. Davide Campari Milano is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  551.00  in Davide Campari Milano on September 22, 2024 and sell it today you would earn a total of  46.00  from holding Davide Campari Milano or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	91.3%
Values	Daily Returns

Visa Class A  vs.  Davide Campari Milano

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Davide Campari Milano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davide Campari Milano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Visa and Davide Campari

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

The idea behind Visa Class A and Davide Campari Milano 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.