Correlation Between Futuretech and Visa

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

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

Diversification Opportunities for Futuretech and Visa

0.23

Correlation Coefficient

Futuretech  Visa

Modest diversification

The 3 months correlation between Futuretech and Visa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II 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 Futuretech 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 Futuretech II 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 Futuretech i.e., Futuretech and Visa go up and down completely randomly.

Pair Corralation between Futuretech and Visa

Assuming the 90 days horizon Futuretech II Acquisition is expected to under-perform the Visa. In addition to that, Futuretech is 2.03 times more volatile than Visa Class A. It trades about -0.07 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.17 per unit of volatility. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Futuretech II Acquisition  vs.  Visa Class A

Futuretech II Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Futuretech II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 Futuretech and Visa

The main advantage of trading using opposite Futuretech and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuretech 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 Futuretech II 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.