Correlation Between INTEL CDR and Visa

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

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

Diversification Opportunities for INTEL CDR and Visa

0.52

Correlation Coefficient

INTEL CDR  Visa

Very weak diversification

The 3 months correlation between INTEL and Visa is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding INTEL CDR 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 INTEL CDR 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 INTEL CDR 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 INTEL CDR i.e., INTEL CDR and Visa go up and down completely randomly.

Pair Corralation between INTEL CDR and Visa

Assuming the 90 days trading horizon INTEL CDR is expected to generate 5.17 times less return on investment than Visa. In addition to that, INTEL CDR is 3.97 times more volatile than Visa Inc CDR. It trades about 0.01 of its total potential returns per unit of risk. Visa Inc CDR is currently generating about 0.23 per unit of volatility. If you would invest  3,006  in Visa Inc CDR on December 1, 2024 and sell it today you would earn a total of  434.00  from holding Visa Inc CDR or generate 14.44% return on investment over 90 days.

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

INTEL CDR  vs.  Visa Inc CDR

INTEL CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INTEL CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Visa Inc CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc CDR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTEL CDR and Visa

The main advantage of trading using opposite INTEL CDR and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTEL CDR 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 INTEL CDR 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.