Correlation Between Visa and Value Fund

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

Diversification Opportunities for Visa and Value Fund

0.05

Correlation Coefficient

Visa  Value Fund

Significant diversification

The 3 months correlation between Visa and Value is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Value Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund I 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund I has no effect on the direction of Visa i.e., Visa and Value Fund go up and down completely randomly.

Pair Corralation between Visa and Value Fund

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Value Fund. However, Visa Class A is 2.0 times less risky than Value Fund. It trades about 0.13 of its potential returns per unit of risk. Value Fund I is currently generating about -0.3 per unit of risk. If you would invest  30,990  in Visa Class A on September 22, 2024 and sell it today you would earn a total of  781.00  from holding Visa Class A or generate 2.52% return on investment over 90 days.

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

Visa Class A  vs.  Value Fund I

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.

Value Fund I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Fund I has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Visa and Value Fund

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

The idea behind Visa Class A and Value Fund I 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.