Correlation Between Visa and Santos
Can any of the company-specific risk be diversified away by investing in both Visa and Santos 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 Santos 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 Santos Ltd ADR, you can compare the effects of market volatilities on Visa and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Santos.
Diversification Opportunities for Visa and Santos
Modest diversification
The 3 months correlation between Visa and Santos is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Santos Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos Ltd ADR 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos Ltd ADR has no effect on the direction of Visa i.e., Visa and Santos go up and down completely randomly.
Pair Corralation between Visa and Santos
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.66 times more return on investment than Santos. However, Visa Class A is 1.51 times less risky than Santos. It trades about 0.05 of its potential returns per unit of risk. Santos Ltd ADR is currently generating about -0.01 per unit of risk. If you would invest 21,141 in Visa Class A on December 30, 2023 and sell it today you would earn a total of 6,767 from holding Visa Class A or generate 32.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 96.96% |
Values | Daily Returns |
Visa Class A vs. Santos Ltd ADR
Performance |
Timeline |
Visa Class A |
Santos Ltd ADR |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Visa and Santos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Santos
The main advantage of trading using opposite Visa and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.Visa vs. MDB Capital Holdings | Visa vs. Orix Corp Ads | Visa vs. LendingClub Corp | Visa vs. Lexinfintech Holdings |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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