Correlation Between Visa and Chavant Capital

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

Diversification Opportunities for Visa and Chavant Capital

-0.26

Correlation Coefficient

Visa  Chavant Capital

Very good diversification

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

Pair Corralation between Visa and Chavant Capital

Taking into account the 90-day investment horizon Visa is expected to generate 8.83 times less return on investment than Chavant Capital. But when comparing it to its historical volatility, Visa Class A is 19.31 times less risky than Chavant Capital. It trades about 0.09 of its potential returns per unit of risk. Chavant Capital Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9.86  in Chavant Capital Acquisition on September 13, 2024 and sell it today you would lose (5.60) from holding Chavant Capital Acquisition or give up 56.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.41%
Values	Daily Returns

Visa Class A  vs.  Chavant Capital Acquisition

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 weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chavant Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chavant Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Chavant Capital

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

The idea behind Visa Class A and Chavant Capital Acquisition 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.