Correlation Between Visa and CannTrust Holdings

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

Diversification Opportunities for Visa and CannTrust Holdings

0.24

Correlation Coefficient

Visa  CannTrust Holdings

Modest diversification

The 3 months correlation between Visa and CannTrust is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CannTrust Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannTrust Holdings 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 CannTrust Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannTrust Holdings has no effect on the direction of Visa i.e., Visa and CannTrust Holdings go up and down completely randomly.

Pair Corralation between Visa and CannTrust Holdings

If you would invest  25,719  in Visa Class A on September 19, 2024 and sell it today you would earn a total of  6,432  from holding Visa Class A or generate 25.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Visa Class A  vs.  CannTrust Holdings

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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.

CannTrust Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CannTrust Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, CannTrust Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Visa and CannTrust Holdings

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

The idea behind Visa Class A and CannTrust Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.