Correlation Between Visa and Voya Solution

Can any of the company-specific risk be diversified away by investing in both Visa and Voya Solution 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 Voya Solution 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 Voya Solution 2045, you can compare the effects of market volatilities on Visa and Voya Solution 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 Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Voya Solution.

Diversification Opportunities for Visa and Voya Solution

0.54

Correlation Coefficient

Visa  Voya Solution

Very weak diversification

The 3 months correlation between Visa and Voya is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Voya Solution 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution 2045 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 Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution 2045 has no effect on the direction of Visa i.e., Visa and Voya Solution go up and down completely randomly.

Pair Corralation between Visa and Voya Solution

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.68 times more return on investment than Voya Solution. However, Visa is 1.68 times more volatile than Voya Solution 2045. It trades about 0.13 of its potential returns per unit of risk. Voya Solution 2045 is currently generating about 0.06 per unit of risk. If you would invest  26,221  in Visa Class A on September 29, 2024 and sell it today you would earn a total of  5,645  from holding Visa Class A or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Visa Class A  vs.  Voya Solution 2045

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.

Voya Solution 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Solution 2045 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Solution 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 Voya Solution

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

The idea behind Visa Class A and Voya Solution 2045 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.