Correlation Between Visa and Paz Oil
Can any of the company-specific risk be diversified away by investing in both Visa and Paz Oil 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 Paz Oil 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 Paz Oil, you can compare the effects of market volatilities on Visa and Paz Oil 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 Paz Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Paz Oil.
Diversification Opportunities for Visa and Paz Oil
Good diversification
The 3 months correlation between Visa and Paz is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Paz Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paz Oil 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 Paz Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paz Oil has no effect on the direction of Visa i.e., Visa and Paz Oil go up and down completely randomly.
Pair Corralation between Visa and Paz Oil
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Paz Oil. However, Visa Class A is 2.26 times less risky than Paz Oil. It trades about -0.14 of its potential returns per unit of risk. Paz Oil is currently generating about -0.11 per unit of risk. If you would invest 28,060 in Visa Class A on January 26, 2024 and sell it today you would lose (558.00) from holding Visa Class A or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Visa Class A vs. Paz Oil
Performance |
| Timeline |
| Visa Class A |
| Paz Oil |
Visa and Paz Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Paz Oil
The main advantage of trading using opposite Visa and Paz Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Paz Oil 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 Paz Oil will offset losses from the drop in Paz Oil's long position.The idea behind Visa Class A and Paz Oil 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.| Paz Oil vs. Delek Group | Paz Oil vs. Bank Hapoalim | Paz Oil vs. Bazan Oil Refineries | Paz Oil vs. Bezeq Israeli Telecommunication |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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