Correlation Between Visa and UTG

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

Diversification Opportunities for Visa and UTG

0.75

Correlation Coefficient

Visa  UTG

Poor diversification

The 3 months correlation between Visa and UTG is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and UTG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTG Inc 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 UTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTG Inc has no effect on the direction of Visa i.e., Visa and UTG go up and down completely randomly.

Pair Corralation between Visa and UTG

If you would invest  28,808  in Visa Class A on September 23, 2024 and sell it today you would earn a total of  2,963  from holding Visa Class A or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Visa Class A  vs.  UTG Inc

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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.

UTG Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, UTG is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and UTG

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

The idea behind Visa Class A and UTG Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.