Correlation Between Visa and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Visa and Elbit Systems 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 Elbit Systems 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 Elbit Systems, you can compare the effects of market volatilities on Visa and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Elbit Systems.
Diversification Opportunities for Visa and Elbit Systems
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Elbit is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Visa i.e., Visa and Elbit Systems go up and down completely randomly.
Pair Corralation between Visa and Elbit Systems
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.68 times more return on investment than Elbit Systems. However, Visa Class A is 1.48 times less risky than Elbit Systems. It trades about 0.05 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.02 per unit of risk. If you would invest 21,118 in Visa Class A on January 24, 2024 and sell it today you would earn a total of 6,115 from holding Visa Class A or generate 28.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.95% |
| Values | Daily Returns |
Visa Class A vs. Elbit Systems
Performance |
| Timeline |
| Visa Class A |
| Elbit Systems |
Visa and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Elbit Systems
The main advantage of trading using opposite Visa and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| Elbit Systems vs. Al Bad Massuot Yitzhak | Elbit Systems vs. Gan Shmuel | Elbit Systems vs. Analyst IMS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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