Correlation Between Visa and CC Neuberger

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

Diversification Opportunities for Visa and CC Neuberger

0.8

Correlation Coefficient

Visa  CC Neuberger

Very poor diversification

The 3 months correlation between Visa and PRPC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CC Neuberger Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CC Neuberger Principal 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 CC Neuberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CC Neuberger Principal has no effect on the direction of Visa i.e., Visa and CC Neuberger go up and down completely randomly.

Pair Corralation between Visa and CC Neuberger

If you would invest  24,807  in Visa Class A on September 14, 2024 and sell it today you would earn a total of  6,667  from holding Visa Class A or generate 26.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.37%
Values	Daily Returns

Visa Class A  vs.  CC Neuberger Principal

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.

CC Neuberger Principal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CC Neuberger Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CC Neuberger is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and CC Neuberger

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

The idea behind Visa Class A and CC Neuberger Principal 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.