Correlation Between Visa and Inter Industries
Can any of the company-specific risk be diversified away by investing in both Visa and Inter Industries 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 Inter Industries 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 Inter Industries, you can compare the effects of market volatilities on Visa and Inter Industries 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 Inter Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Inter Industries.
Diversification Opportunities for Visa and Inter Industries
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Inter is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Inter Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Industries 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 Inter Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Industries has no effect on the direction of Visa i.e., Visa and Inter Industries go up and down completely randomly.
Pair Corralation between Visa and Inter Industries
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Inter Industries. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 4.14 times less risky than Inter Industries. The stock trades about -0.3 of its potential returns per unit of risk. The Inter Industries is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 26,370 in Inter Industries on January 19, 2024 and sell it today you would earn a total of 2,790 from holding Inter Industries or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Visa Class A vs. Inter Industries
Performance |
| Timeline |
| Visa Class A |
| Inter Industries |
Visa and Inter Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Inter Industries
The main advantage of trading using opposite Visa and Inter Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Inter Industries 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 Inter Industries will offset losses from the drop in Inter Industries' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| Inter Industries vs. Automatic Bank Services | Inter Industries vs. EN Shoham Business | Inter Industries vs. Rapac Communication Infrastructure | Inter Industries vs. Tadiran Hldg |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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