Correlation Between Visa and Sit Esg

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

Diversification Opportunities for Visa and Sit Esg

0.55

Correlation Coefficient

Visa  Sit Esg

Very weak diversification

The 3 months correlation between Visa and Sit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sit Esg Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Esg Growth 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 Sit Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Esg Growth has no effect on the direction of Visa i.e., Visa and Sit Esg go up and down completely randomly.

Pair Corralation between Visa and Sit Esg

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.1 times more return on investment than Sit Esg. However, Visa is 2.1 times more volatile than Sit Esg Growth. It trades about 0.23 of its potential returns per unit of risk. Sit Esg Growth is currently generating about 0.34 per unit of risk. If you would invest  29,129  in Visa Class A on September 5, 2024 and sell it today you would earn a total of  1,861  from holding Visa Class A or generate 6.39% 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.  Sit Esg Growth

Visa Class A

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) 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.

Sit Esg Growth

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Visa and Sit Esg

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

The idea behind Visa Class A and Sit Esg Growth 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.