Correlation Between Aberdeen Global and Visa

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

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

Diversification Opportunities for Aberdeen Global and Visa

0.51

Correlation Coefficient

Aberdeen Global  Visa

Very weak diversification

The 3 months correlation between Aberdeen and Visa is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global IF 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 Aberdeen Global 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 Aberdeen Global IF 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 Aberdeen Global i.e., Aberdeen Global and Visa go up and down completely randomly.

Pair Corralation between Aberdeen Global and Visa

Considering the 90-day investment horizon Aberdeen Global IF is expected to under-perform the Visa. But the stock apears to be less risky and, when comparing its historical volatility, Aberdeen Global IF is 1.12 times less risky than Visa. The stock trades about -0.02 of its potential returns per unit of risk. The Visa Class A is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  28,630  in Visa Class A on September 19, 2024 and sell it today you would earn a total of  3,521  from holding Visa Class A or generate 12.3% return on investment over 90 days.

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

Aberdeen Global IF  vs.  Visa Class A

Aberdeen Global IF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Aberdeen Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 Aberdeen Global and Visa

The main advantage of trading using opposite Aberdeen Global and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global 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 Aberdeen Global IF 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..