Correlation Between Visa and Solid Impact

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

Diversification Opportunities for Visa and Solid Impact

0.0

Correlation Coefficient

Visa  Solid Impact

Pay attention - limited upside

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

Pair Corralation between Visa and Solid Impact

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Solid Impact. However, Visa Class A is 2.93 times less risky than Solid Impact. It trades about 0.08 of its potential returns per unit of risk. Solid Impact Investments is currently generating about -0.06 per unit of risk. If you would invest  21,523  in Visa Class A on August 31, 2024 and sell it today you would earn a total of  9,947  from holding Visa Class A or generate 46.22% return on investment over 90 days.

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

Visa Class A  vs.  Solid Impact Investments

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Solid Impact Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Solid Impact

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

The idea behind Visa Class A and Solid Impact Investments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.