Correlation Between Visa and Brunello Cucinelli

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

Diversification Opportunities for Visa and Brunello Cucinelli

0.26

Correlation Coefficient

Visa  Brunello Cucinelli

Modest diversification

The 3 months correlation between Visa and Brunello is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Brunello Cucinelli SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunello Cucinelli SpA 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 Brunello Cucinelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunello Cucinelli SpA has no effect on the direction of Visa i.e., Visa and Brunello Cucinelli go up and down completely randomly.

Pair Corralation between Visa and Brunello Cucinelli

Taking into account the 90-day investment horizon Visa is expected to generate 6.15 times less return on investment than Brunello Cucinelli. But when comparing it to its historical volatility, Visa Class A is 2.6 times less risky than Brunello Cucinelli. It trades about 0.13 of its potential returns per unit of risk. Brunello Cucinelli SpA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  8,810  in Brunello Cucinelli SpA on September 23, 2024 and sell it today you would earn a total of  1,520  from holding Brunello Cucinelli SpA or generate 17.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Brunello Cucinelli SpA

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.

Brunello Cucinelli SpA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brunello Cucinelli SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brunello Cucinelli reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Brunello Cucinelli

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

The idea behind Visa Class A and Brunello Cucinelli SpA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.