Correlation Between Visa and Dimed SA

Can any of the company-specific risk be diversified away by investing in both Visa and Dimed SA 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 Dimed SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visa Inc and Dimed SA Distribuidora, you can compare the effects of market volatilities on Visa and Dimed SA 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 Dimed SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Dimed SA.

Diversification Opportunities for Visa and Dimed SA

-0.87

Correlation Coefficient

Visa  Dimed SA

Pay attention - limited upside

The 3 months correlation between Visa and Dimed is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Dimed SA Distribuidora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimed SA Distribuidora 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 Inc are associated (or correlated) with Dimed SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimed SA Distribuidora has no effect on the direction of Visa i.e., Visa and Dimed SA go up and down completely randomly.

Pair Corralation between Visa and Dimed SA

Assuming the 90 days trading horizon Visa Inc is expected to generate 1.07 times more return on investment than Dimed SA. However, Visa is 1.07 times more volatile than Dimed SA Distribuidora. It trades about 0.3 of its potential returns per unit of risk. Dimed SA Distribuidora is currently generating about -0.14 per unit of risk. If you would invest  7,487  in Visa Inc on September 30, 2024 and sell it today you would earn a total of  2,462  from holding Visa Inc or generate 32.88% return on investment over 90 days.

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

Visa Inc  vs.  Dimed SA Distribuidora

Visa Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Visa sustained solid returns over the last few months and may actually be approaching a breakup point.

Dimed SA Distribuidora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimed SA Distribuidora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Visa and Dimed SA

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

The idea behind Visa Inc and Dimed SA Distribuidora 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.