Correlation Between Visa and Vienna Insurance

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

Diversification Opportunities for Visa and Vienna Insurance

-0.24

Correlation Coefficient

Visa  Vienna Insurance

Very good diversification

The 3 months correlation between Visa and Vienna is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance 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 Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Visa i.e., Visa and Vienna Insurance go up and down completely randomly.

Pair Corralation between Visa and Vienna Insurance

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.98 times more return on investment than Vienna Insurance. However, Visa Class A is 1.02 times less risky than Vienna Insurance. It trades about 0.13 of its potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.0 per unit of risk. If you would invest  26,221  in Visa Class A on September 29, 2024 and sell it today you would earn a total of  5,645  from holding Visa Class A or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Visa Class A  vs.  Vienna Insurance Group

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Vienna Insurance

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vienna Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vienna Insurance 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 Vienna Insurance

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

The idea behind Visa Class A and Vienna Insurance Group 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.