Correlation Between Visa and Ave Maria

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

Diversification Opportunities for Visa and Ave Maria

0.77

Correlation Coefficient

Visa  Ave Maria

Poor diversification

The 3 months correlation between Visa and Ave is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ave Maria Rising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ave Maria Rising 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 Ave Maria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ave Maria Rising has no effect on the direction of Visa i.e., Visa and Ave Maria go up and down completely randomly.

Pair Corralation between Visa and Ave Maria

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.87 times more return on investment than Ave Maria. However, Visa is 1.87 times more volatile than Ave Maria Rising. It trades about 0.16 of its potential returns per unit of risk. Ave Maria Rising is currently generating about 0.18 per unit of risk. If you would invest  27,995  in Visa Class A on September 4, 2024 and sell it today you would earn a total of  3,670  from holding Visa Class A or generate 13.11% return on investment over 90 days.

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

Visa Class A  vs.  Ave Maria Rising

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Ave Maria Rising

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ave Maria Rising are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ave Maria may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Ave Maria

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

The idea behind Visa Class A and Ave Maria Rising 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..