Correlation Between Visa and MedTech Acquisition

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

Diversification Opportunities for Visa and MedTech Acquisition

0.49

Correlation Coefficient

Visa  MedTech Acquisition

Very weak diversification

The 3 months correlation between Visa and MedTech is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MedTech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedTech Acquisition 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 MedTech Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedTech Acquisition has no effect on the direction of Visa i.e., Visa and MedTech Acquisition go up and down completely randomly.

Pair Corralation between Visa and MedTech Acquisition

Taking into account the 90-day investment horizon Visa is expected to generate 36.92 times less return on investment than MedTech Acquisition. But when comparing it to its historical volatility, Visa Class A is 29.83 times less risky than MedTech Acquisition. It trades about 0.09 of its potential returns per unit of risk. MedTech Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14.00  in MedTech Acquisition on September 13, 2024 and sell it today you would lose (4.00) from holding MedTech Acquisition or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	29.15%
Values	Daily Returns

Visa Class A  vs.  MedTech Acquisition

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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.

MedTech Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedTech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, MedTech Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and MedTech Acquisition

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

The idea behind Visa Class A and MedTech Acquisition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.