Correlation Between Visa and Russell Corp

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

Diversification Opportunities for Visa and Russell Corp

0.0

Correlation Coefficient

Visa  Russell Corp

Pay attention - limited upside

The 3 months correlation between Visa and Russell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Russell Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell Corp 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 Russell Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell Corp has no effect on the direction of Visa i.e., Visa and Russell Corp go up and down completely randomly.

Pair Corralation between Visa and Russell Corp

If you would invest  27,442  in Visa Class A on September 28, 2024 and sell it today you would earn a total of  4,623  from holding Visa Class A or generate 16.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Russell Corp

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.

Russell Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Russell Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Russell Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Russell Corp

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

The idea behind Visa Class A and Russell Corp 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.