Correlation Between Visa and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Visa and Skjern Bank 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 Skjern Bank 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 Skjern Bank AS, you can compare the effects of market volatilities on Visa and Skjern Bank 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 Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Skjern Bank.
Diversification Opportunities for Visa and Skjern Bank
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Skjern is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank AS 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Visa i.e., Visa and Skjern Bank go up and down completely randomly.
Pair Corralation between Visa and Skjern Bank
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Skjern Bank. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.4 times less risky than Skjern Bank. The stock trades about -0.28 of its potential returns per unit of risk. The Skjern Bank AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 18,300 in Skjern Bank AS on January 17, 2024 and sell it today you would earn a total of 50.00 from holding Skjern Bank AS or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Visa Class A vs. Skjern Bank AS
Performance |
| Timeline |
| Visa Class A |
| Skjern Bank AS |
Visa and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Skjern Bank
The main advantage of trading using opposite Visa and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Skjern Bank 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 Skjern Bank will offset losses from the drop in Skjern Bank's long position.| Visa vs. Diamond Hill Investment | Visa vs. Distoken Acquisition | Visa vs. AllianceBernstein Holding LP | Visa vs. Associated Capital Group |
| Skjern Bank vs. Spar Nord Bank | Skjern Bank vs. PF BankNordik | Skjern Bank vs. Strategic Investments AS | Skjern Bank vs. Scandinavian Tobacco Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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