Correlation Between Visa and Ashmore Group
Can any of the company-specific risk be diversified away by investing in both Visa and Ashmore 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 Ashmore 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 Ashmore Group Plc, you can compare the effects of market volatilities on Visa and Ashmore 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 Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ashmore Group.
Diversification Opportunities for Visa and Ashmore Group
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Ashmore is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc 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 Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Visa i.e., Visa and Ashmore Group go up and down completely randomly.
Pair Corralation between Visa and Ashmore Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than Ashmore Group. However, Visa Class A is 1.97 times less risky than Ashmore Group. It trades about -0.41 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about -0.3 per unit of risk. If you would invest 28,928 in Visa Class A on January 20, 2024 and sell it today you would lose (1,950) from holding Visa Class A or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Ashmore Group Plc
Performance |
| Timeline |
| Visa Class A |
| Ashmore Group Plc |
Visa and Ashmore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ashmore Group
The main advantage of trading using opposite Visa and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ashmore 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 Ashmore Group will offset losses from the drop in Ashmore Group's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| Ashmore Group vs. Flow Capital Corp | Ashmore Group vs. Blackhawk Growth Corp | Ashmore Group vs. AGF Management Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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