Correlation Between Visa and Legal General
Can any of the company-specific risk be diversified away by investing in both Visa and Legal General 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 Legal General 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 Legal General Ucits, you can compare the effects of market volatilities on Visa and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Legal General.
Diversification Opportunities for Visa and Legal General
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Legal is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Legal General Ucits in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Ucits 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Ucits has no effect on the direction of Visa i.e., Visa and Legal General go up and down completely randomly.
Pair Corralation between Visa and Legal General
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.0 times more return on investment than Legal General. However, Visa is 1.0 times more volatile than Legal General Ucits. It trades about 0.12 of its potential returns per unit of risk. Legal General Ucits is currently generating about -0.1 per unit of risk. If you would invest 32,037 in Visa Class A on December 26, 2024 and sell it today you would earn a total of 2,425 from holding Visa Class A or generate 7.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 88.33% |
Values | Daily Returns |
Visa Class A vs. Legal General Ucits
Performance |
Timeline |
Visa Class A |
Legal General Ucits |
Visa and Legal General Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Legal General
The main advantage of trading using opposite Visa and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
Legal General vs. Legal General Ucits | Legal General vs. Legal General UCITS | Legal General vs. Legal General Ucits | Legal General vs. Legal General UCITS |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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