Correlation Between Western Acquisition and Visa

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

By analyzing existing cross correlation between Western Acquisition Ventures and Visa Class A, you can compare the effects of market volatilities on Western Acquisition and Visa 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 Western Acquisition with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Visa.

Diversification Opportunities for Western Acquisition and Visa

0.69

Correlation Coefficient

Western Acquisition  Visa

Poor diversification

The 3 months correlation between Western and Visa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Western Acquisition i.e., Western Acquisition and Visa go up and down completely randomly.

Pair Corralation between Western Acquisition and Visa

Assuming the 90 days horizon Western Acquisition is expected to generate 1.68 times less return on investment than Visa. In addition to that, Western Acquisition is 2.27 times more volatile than Visa Class A. It trades about 0.02 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.09 per unit of volatility. If you would invest  27,076  in Visa Class A on September 18, 2024 and sell it today you would earn a total of  4,513  from holding Visa Class A or generate 16.67% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Visa Class A

Western Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Western Acquisition and Visa

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

The idea behind Western Acquisition Ventures and Visa Class A 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..