Correlation Between Visa and AES Corp
Can any of the company-specific risk be diversified away by investing in both Visa and AES Corp 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 AES Corp 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 AES Corp, you can compare the effects of market volatilities on Visa and AES Corp 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 AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AES Corp.
Diversification Opportunities for Visa and AES Corp
Pay attention - limited upside
The 3 months correlation between Visa and AES is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp 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 AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Visa i.e., Visa and AES Corp go up and down completely randomly.
Pair Corralation between Visa and AES Corp
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.49 times more return on investment than AES Corp. However, Visa Class A is 2.03 times less risky than AES Corp. It trades about 0.23 of its potential returns per unit of risk. AES Corp is currently generating about -0.26 per unit of risk. If you would invest 27,226 in Visa Class A on September 24, 2024 and sell it today you would earn a total of 4,545 from holding Visa Class A or generate 16.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
Visa Class A vs. AES Corp
Performance |
Timeline |
Visa Class A |
AES Corp |
Visa and AES Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and AES Corp
The main advantage of trading using opposite Visa and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
AES Corp vs. Uniper SE | AES Corp vs. Mulberry Group PLC | AES Corp vs. London Security Plc | AES Corp vs. Triad Group PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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