Correlation Between Visa and Rupert Resources

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

Diversification Opportunities for Visa and Rupert Resources

-0.29

Correlation Coefficient

Visa  Rupert Resources

Very good diversification

The 3 months correlation between Visa and Rupert is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rupert Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rupert Resources 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 Rupert Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rupert Resources has no effect on the direction of Visa i.e., Visa and Rupert Resources go up and down completely randomly.

Pair Corralation between Visa and Rupert Resources

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.54 times more return on investment than Rupert Resources. However, Visa Class A is 1.84 times less risky than Rupert Resources. It trades about 0.1 of its potential returns per unit of risk. Rupert Resources is currently generating about 0.03 per unit of risk. If you would invest  27,011  in Visa Class A on September 14, 2024 and sell it today you would earn a total of  4,463  from holding Visa Class A or generate 16.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Rupert Resources

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rupert Resources

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Rupert Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rupert Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Rupert Resources

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

The idea behind Visa Class A and Rupert Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.