Correlation Between PHN Multi and Visa

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

By analyzing existing cross correlation between PHN Multi Style All Cap and Visa Inc CDR, you can compare the effects of market volatilities on PHN Multi 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 PHN Multi with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Visa.

Diversification Opportunities for PHN Multi and Visa

-0.39

Correlation Coefficient

PHN Multi  Visa

Very good diversification

The 3 months correlation between PHN and Visa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and Visa Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc CDR and PHN Multi 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 PHN Multi Style All Cap 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 Inc CDR has no effect on the direction of PHN Multi i.e., PHN Multi and Visa go up and down completely randomly.

Pair Corralation between PHN Multi and Visa

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to under-perform the Visa. In addition to that, PHN Multi is 1.69 times more volatile than Visa Inc CDR. It trades about -0.1 of its total potential returns per unit of risk. Visa Inc CDR is currently generating about 0.18 per unit of volatility. If you would invest  3,006  in Visa Inc CDR on November 29, 2024 and sell it today you would earn a total of  308.00  from holding Visa Inc CDR or generate 10.25% return on investment over 90 days.

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

PHN Multi Style All Cap  vs.  Visa Inc CDR

PHN Multi Style

Risk-Adjusted Performance

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Visa Inc CDR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with PHN Multi and Visa

The main advantage of trading using opposite PHN Multi and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHN Multi 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 PHN Multi Style All Cap and Visa Inc CDR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.