Correlation Between Bannix Acquisition and Visa

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

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

Diversification Opportunities for Bannix Acquisition and Visa

0.77

Correlation Coefficient

Bannix Acquisition  Visa

Poor diversification

The 3 months correlation between Bannix and Visa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bannix Acquisition Corp 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 Bannix 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 Bannix Acquisition Corp 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 Bannix Acquisition i.e., Bannix Acquisition and Visa go up and down completely randomly.

Pair Corralation between Bannix Acquisition and Visa

Given the investment horizon of 90 days Bannix Acquisition is expected to generate 4.36 times less return on investment than Visa. But when comparing it to its historical volatility, Bannix Acquisition Corp is 4.08 times less risky than Visa. It trades about 0.09 of its potential returns per unit of risk. Visa Class A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  20,266  in Visa Class A on September 13, 2024 and sell it today you would earn a total of  11,157  from holding Visa Class A or generate 55.05% return on investment over 90 days.

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

Bannix Acquisition Corp  vs.  Visa Class A

Bannix Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bannix Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Bannix Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bannix Acquisition and Visa

The main advantage of trading using opposite Bannix Acquisition and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bannix 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 Bannix Acquisition Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.