Correlation Between Visa and NoHo Partners

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

Diversification Opportunities for Visa and NoHo Partners

0.51

Correlation Coefficient

Visa  NoHo Partners

Very weak diversification

The 3 months correlation between Visa and NoHo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and NoHo Partners Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NoHo Partners Oyj 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 NoHo Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NoHo Partners Oyj has no effect on the direction of Visa i.e., Visa and NoHo Partners go up and down completely randomly.

Pair Corralation between Visa and NoHo Partners

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.03 times more return on investment than NoHo Partners. However, Visa is 1.03 times more volatile than NoHo Partners Oyj. It trades about 0.13 of its potential returns per unit of risk. NoHo Partners Oyj is currently generating about -0.02 per unit of risk. If you would invest  26,221  in Visa Class A on September 28, 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	100.0%
Values	Daily Returns

Visa Class A  vs.  NoHo Partners Oyj

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.

NoHo Partners Oyj

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NoHo Partners Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, NoHo Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and NoHo Partners

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

The idea behind Visa Class A and NoHo Partners Oyj 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .