Correlation Between Visa and Bank Polska

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

Diversification Opportunities for Visa and Bank Polska

-0.39

Correlation Coefficient

Visa  Bank Polska

Very good diversification

The 3 months correlation between Visa and Bank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa 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 Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of Visa i.e., Visa and Bank Polska go up and down completely randomly.

Pair Corralation between Visa and Bank Polska

Taking into account the 90-day investment horizon Visa is expected to generate 1.44 times less return on investment than Bank Polska. But when comparing it to its historical volatility, Visa Class A is 1.96 times less risky than Bank Polska. It trades about 0.09 of its potential returns per unit of risk. Bank Polska Kasa is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,076  in Bank Polska Kasa on September 26, 2024 and sell it today you would earn a total of  5,889  from holding Bank Polska Kasa or generate 72.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Visa Class A  vs.  Bank Polska Kasa

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Polska Kasa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Visa and Bank Polska

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

The idea behind Visa Class A and Bank Polska Kasa 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.