Correlation Between A SPAC and Visa

Can any of the company-specific risk be diversified away by investing in both A SPAC and Visa 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 A SPAC and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A SPAC II and Visa Class A, you can compare the effects of market volatilities on A SPAC and Visa 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 A SPAC with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of A SPAC and Visa.

Diversification Opportunities for A SPAC and Visa

-0.49

Correlation Coefficient

A SPAC  Visa

Very good diversification

The 3 months correlation between ASCB and Visa is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding A SPAC II and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and A SPAC 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 A SPAC II are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of A SPAC i.e., A SPAC and Visa go up and down completely randomly.

Pair Corralation between A SPAC and Visa

Given the investment horizon of 90 days A SPAC is expected to generate 35.65 times less return on investment than Visa. In addition to that, A SPAC is 1.22 times more volatile than Visa Class A. It trades about 0.0 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.12 per unit of volatility. If you would invest  22,704  in Visa Class A on September 21, 2024 and sell it today you would earn a total of  9,067  from holding Visa Class A or generate 39.94% return on investment over 90 days.

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

A SPAC II  vs.  Visa Class A

A SPAC II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with A SPAC and Visa

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

The idea behind A SPAC II and Visa Class A 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.