Correlation Between Visa and Ellomay Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Ellomay Capital 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 Ellomay Capital 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 Ellomay Capital, you can compare the effects of market volatilities on Visa and Ellomay Capital 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 Ellomay Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ellomay Capital.
Diversification Opportunities for Visa and Ellomay Capital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Ellomay is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ellomay Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellomay Capital 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 Ellomay Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellomay Capital has no effect on the direction of Visa i.e., Visa and Ellomay Capital go up and down completely randomly.
Pair Corralation between Visa and Ellomay Capital
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Ellomay Capital. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 2.49 times less risky than Ellomay Capital. The stock trades about -0.41 of its potential returns per unit of risk. The Ellomay Capital is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 595,400 in Ellomay Capital on January 20, 2024 and sell it today you would lose (24,700) from holding Ellomay Capital or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Visa Class A vs. Ellomay Capital
Performance |
| Timeline |
| Visa Class A |
| Ellomay Capital |
Visa and Ellomay Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ellomay Capital
The main advantage of trading using opposite Visa and Ellomay Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ellomay Capital 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 Ellomay Capital will offset losses from the drop in Ellomay Capital's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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