Correlation Between Visa and Innovativ Media

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

Diversification Opportunities for Visa and Innovativ Media

-0.29

Correlation Coefficient

Visa  Innovativ Media

Very good diversification

The 3 months correlation between Visa and Innovativ is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Innovativ Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovativ Media Group 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 Innovativ Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovativ Media Group has no effect on the direction of Visa i.e., Visa and Innovativ Media go up and down completely randomly.

Pair Corralation between Visa and Innovativ Media

If you would invest  27,226  in Visa Class A on September 24, 2024 and sell it today you would earn a total of  4,495  from holding Visa Class A or generate 16.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Visa Class A  vs.  Innovativ Media Group

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Innovativ Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovativ Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Innovativ Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and Innovativ Media

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

The idea behind Visa Class A and Innovativ Media Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.