Correlation Between Visa and Inbar Group
Can any of the company-specific risk be diversified away by investing in both Visa and Inbar Group 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 Inbar Group 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 Inbar Group Finance, you can compare the effects of market volatilities on Visa and Inbar Group 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 Inbar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Inbar Group.
Diversification Opportunities for Visa and Inbar Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Inbar is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Inbar Group Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inbar Group Finance 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 Inbar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inbar Group Finance has no effect on the direction of Visa i.e., Visa and Inbar Group go up and down completely randomly.
Pair Corralation between Visa and Inbar Group
Taking into account the 90-day investment horizon Visa is expected to generate 9.94 times less return on investment than Inbar Group. But when comparing it to its historical volatility, Visa Class A is 15.9 times less risky than Inbar Group. It trades about 0.25 of its potential returns per unit of risk. Inbar Group Finance is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 33,190 in Inbar Group Finance on December 1, 2024 and sell it today you would earn a total of 35,040 from holding Inbar Group Finance or generate 105.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 86.67% |
Values | Daily Returns |
Visa Class A vs. Inbar Group Finance
Performance |
Timeline |
Visa Class A |
Inbar Group Finance |
Visa and Inbar Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Inbar Group
The main advantage of trading using opposite Visa and Inbar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Inbar Group 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 Inbar Group will offset losses from the drop in Inbar Group's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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