Correlation Between Visa and Gmo Global

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

Diversification Opportunities for Visa and Gmo Global

-0.64

Correlation Coefficient

Visa  Gmo Global

Excellent diversification

The 3 months correlation between Visa and Gmo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Gmo Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Asset 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 Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Asset has no effect on the direction of Visa i.e., Visa and Gmo Global go up and down completely randomly.

Pair Corralation between Visa and Gmo Global

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.15 times more return on investment than Gmo Global. However, Visa is 2.15 times more volatile than Gmo Global Asset. It trades about 0.1 of its potential returns per unit of risk. Gmo Global Asset is currently generating about 0.15 per unit of risk. If you would invest  30,948  in Visa Class A on September 14, 2024 and sell it today you would earn a total of  475.00  from holding Visa Class A or generate 1.53% 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.  Gmo Global Asset

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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.

Gmo Global Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Global Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Gmo Global

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

The idea behind Visa Class A and Gmo Global Asset 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.