Correlation Between Visa and YIT Oyj

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

Diversification Opportunities for Visa and YIT Oyj

-0.51

Correlation Coefficient

Visa  YIT Oyj

Excellent diversification

The 3 months correlation between Visa and YIT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT Oyj 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 YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of Visa i.e., Visa and YIT Oyj go up and down completely randomly.

Pair Corralation between Visa and YIT Oyj

Taking into account the 90-day investment horizon Visa is expected to generate 3.63 times less return on investment than YIT Oyj. But when comparing it to its historical volatility, Visa Class A is 2.69 times less risky than YIT Oyj. It trades about 0.08 of its potential returns per unit of risk. YIT Oyj is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  230.00  in YIT Oyj on October 10, 2024 and sell it today you would earn a total of  9.00  from holding YIT Oyj or generate 3.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Visa Class A  vs.  YIT Oyj

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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 February 2025.

YIT Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YIT Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YIT Oyj is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and YIT Oyj

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

The idea behind Visa Class A and YIT Oyj 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.