Correlation Between Consilium Acquisition and Visa

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

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

Diversification Opportunities for Consilium Acquisition and Visa

0.42

Correlation Coefficient

Consilium Acquisition  Visa

Very weak diversification

The 3 months correlation between Consilium and Visa is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Consilium Acquisition I 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 Consilium Acquisition 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 Consilium Acquisition I 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 Consilium Acquisition i.e., Consilium Acquisition and Visa go up and down completely randomly.

Pair Corralation between Consilium Acquisition and Visa

Given the investment horizon of 90 days Consilium Acquisition is expected to generate 21.56 times less return on investment than Visa. But when comparing it to its historical volatility, Consilium Acquisition I is 6.0 times less risky than Visa. It trades about 0.03 of its potential returns per unit of risk. Visa Class A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  28,793  in Visa Class A on September 18, 2024 and sell it today you would earn a total of  2,796  from holding Visa Class A or generate 9.71% return on investment over 90 days.

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

Consilium Acquisition I  vs.  Visa Class A

Consilium Acquisition

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consilium Acquisition I are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Consilium Acquisition is not utilizing all of its potentials. The latest stock price disarray, 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 Consilium Acquisition and Visa

The main advantage of trading using opposite Consilium Acquisition and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consilium Acquisition 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 Consilium Acquisition I 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.