Correlation Between Visa and Integrated Cannabis

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

Diversification Opportunities for Visa and Integrated Cannabis

-0.5

Correlation Coefficient

Visa  Integrated Cannabis

Very good diversification

The 3 months correlation between Visa and Integrated is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Integrated Cannabis Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Cannabis 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 Integrated Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Cannabis has no effect on the direction of Visa i.e., Visa and Integrated Cannabis go up and down completely randomly.

Pair Corralation between Visa and Integrated Cannabis

Taking into account the 90-day investment horizon Visa is expected to generate 17.34 times less return on investment than Integrated Cannabis. But when comparing it to its historical volatility, Visa Class A is 15.29 times less risky than Integrated Cannabis. It trades about 0.09 of its potential returns per unit of risk. Integrated Cannabis Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Integrated Cannabis Solutions on September 14, 2024 and sell it today you would earn a total of  0.41  from holding Integrated Cannabis Solutions or generate 512.5% return on investment over 90 days.

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

Visa Class A  vs.  Integrated Cannabis Solutions

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.

Integrated Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Cannabis Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Integrated Cannabis is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Integrated Cannabis

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

The idea behind Visa Class A and Integrated Cannabis Solutions 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.