Correlation Between Visa and DKINYM

Can any of the company-specific risk be diversified away by investing in both Visa and DKINYM 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 DKINYM 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 Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on Visa and DKINYM 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 DKINYM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and DKINYM.

Diversification Opportunities for Visa and DKINYM

-0.01

Correlation Coefficient

Visa  DKINYM

Good diversification

The 3 months correlation between Visa and DKINYM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen 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 DKINYM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Visa i.e., Visa and DKINYM go up and down completely randomly.

Pair Corralation between Visa and DKINYM

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.22 times more return on investment than DKINYM. However, Visa is 1.22 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.08 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.09 per unit of risk. If you would invest  25,641  in Visa Class A on September 12, 2024 and sell it today you would earn a total of  5,738  from holding Visa Class A or generate 22.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Investeringsforeningen Danske

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Investeringsforeningen

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsforeningen Danske Invest are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak forward indicators, DKINYM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and DKINYM

The main advantage of trading using opposite Visa and DKINYM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, DKINYM 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 DKINYM will offset losses from the drop in DKINYM's long position.

The idea behind Visa Class A and Investeringsforeningen Danske Invest 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.