Correlation Between Visa and NV Bekaert

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

Diversification Opportunities for Visa and NV Bekaert

-0.7

Correlation Coefficient

Visa  NV Bekaert

Excellent diversification

The 3 months correlation between Visa and BEKAY is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA 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 NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Visa i.e., Visa and NV Bekaert go up and down completely randomly.

Pair Corralation between Visa and NV Bekaert

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.63 times more return on investment than NV Bekaert. However, Visa Class A is 1.58 times less risky than NV Bekaert. It trades about 0.12 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.17 per unit of risk. If you would invest  28,808  in Visa Class A on September 21, 2024 and sell it today you would earn a total of  2,963  from holding Visa Class A or generate 10.29% return on investment over 90 days.

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

Visa Class A  vs.  NV Bekaert SA

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.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa and NV Bekaert

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

The idea behind Visa Class A and NV Bekaert SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..