Correlation Between Visa and Iberpapel Gestion

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

Diversification Opportunities for Visa and Iberpapel Gestion

0.15

Correlation Coefficient

Visa  Iberpapel Gestion

Average diversification

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

Pair Corralation between Visa and Iberpapel Gestion

Taking into account the 90-day investment horizon Visa is expected to generate 1.37 times less return on investment than Iberpapel Gestion. But when comparing it to its historical volatility, Visa Class A is 1.07 times less risky than Iberpapel Gestion. It trades about 0.11 of its potential returns per unit of risk. Iberpapel Gestion SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,855  in Iberpapel Gestion SA on December 19, 2024 and sell it today you would earn a total of  175.00  from holding Iberpapel Gestion SA or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Visa Class A  vs.  Iberpapel Gestion SA

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Iberpapel Gestion

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iberpapel Gestion SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Iberpapel Gestion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Iberpapel Gestion

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

The idea behind Visa Class A and Iberpapel Gestion SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..