Correlation Between Four Leaf and Visa

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

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

Diversification Opportunities for Four Leaf and Visa

0.03

Correlation Coefficient

Four Leaf  Visa

Significant diversification

The 3 months correlation between Four and Visa is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Four Leaf Acquisition 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 Four Leaf 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 Four Leaf Acquisition 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 Four Leaf i.e., Four Leaf and Visa go up and down completely randomly.

Pair Corralation between Four Leaf and Visa

Assuming the 90 days horizon Four Leaf is expected to generate 3.39 times less return on investment than Visa. But when comparing it to its historical volatility, Four Leaf Acquisition is 3.8 times less risky than Visa. It trades about 0.13 of its potential returns per unit of risk. Visa Class A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  32,037  in Visa Class A on December 25, 2024 and sell it today you would earn a total of  2,425  from holding Visa Class A or generate 7.57% return on investment over 90 days.

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

Four Leaf Acquisition  vs.  Visa Class A

Four Leaf Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Visa Class A

Risk-Adjusted Performance

Modest

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 April 2025.

Pair Trading with Four Leaf and Visa

The main advantage of trading using opposite Four Leaf and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Leaf 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 Four Leaf Acquisition 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.