Correlation Between Visa and KBC Group
Can any of the company-specific risk be diversified away by investing in both Visa and KBC 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 KBC 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 KBC Group NV, you can compare the effects of market volatilities on Visa and KBC 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 KBC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KBC Group.
Diversification Opportunities for Visa and KBC Group
Excellent diversification
The 3 months correlation between Visa and KBC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KBC Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Group NV 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 KBC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Group NV has no effect on the direction of Visa i.e., Visa and KBC Group go up and down completely randomly.
Pair Corralation between Visa and KBC Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than KBC Group. However, Visa Class A is 1.93 times less risky than KBC Group. It trades about 0.14 of its potential returns per unit of risk. KBC Group NV is currently generating about 0.05 per unit of risk. If you would invest 31,182 in Visa Class A on September 27, 2024 and sell it today you would earn a total of 883.00 from holding Visa Class A or generate 2.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Visa Class A vs. KBC Group NV
Performance |
Timeline |
Visa Class A |
KBC Group NV |
Visa and KBC Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and KBC Group
The main advantage of trading using opposite Visa and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, KBC 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 KBC Group will offset losses from the drop in KBC Group's long position.Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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