Correlation Between Visa and Grupo Posadas

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

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

Diversification Opportunities for Visa and Grupo Posadas

-0.73

Correlation Coefficient

Visa  Grupo Posadas

Pay attention - limited upside

The 3 months correlation between Visa and Grupo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Grupo Posadas SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Posadas SAB and Visa 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 Visa Inc are associated (or correlated) with Grupo Posadas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Posadas SAB has no effect on the direction of Visa i.e., Visa and Grupo Posadas go up and down completely randomly.

Pair Corralation between Visa and Grupo Posadas

Given the investment horizon of 90 days Visa Inc is expected to generate 2.21 times more return on investment than Grupo Posadas. However, Visa is 2.21 times more volatile than Grupo Posadas SAB. It trades about 0.13 of its potential returns per unit of risk. Grupo Posadas SAB is currently generating about -0.14 per unit of risk. If you would invest  467,588  in Visa Inc on October 9, 2024 and sell it today you would earn a total of  166,912  from holding Visa Inc or generate 35.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

Visa Inc  vs.  Grupo Posadas SAB

Visa Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Posadas SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Visa and Grupo Posadas

The main advantage of trading using opposite Visa and Grupo Posadas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Grupo Posadas 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 Grupo Posadas will offset losses from the drop in Grupo Posadas' long position.

The idea behind Visa Inc and Grupo Posadas SAB 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.