Correlation Between Visa and Surgical Science

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

By analyzing existing cross correlation between Visa Class A and Surgical Science Sweden, you can compare the effects of market volatilities on Visa and Surgical Science 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 Surgical Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Surgical Science.

Diversification Opportunities for Visa and Surgical Science

0.68

Correlation Coefficient

Visa  Surgical Science

Poor diversification

The 3 months correlation between Visa and Surgical is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden 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 Class A are associated (or correlated) with Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Visa i.e., Visa and Surgical Science go up and down completely randomly.

Pair Corralation between Visa and Surgical Science

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.46 times more return on investment than Surgical Science. However, Visa Class A is 2.16 times less risky than Surgical Science. It trades about 0.11 of its potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.02 per unit of risk. If you would invest  26,932  in Visa Class A on September 1, 2024 and sell it today you would earn a total of  4,576  from holding Visa Class A or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Visa Class A  vs.  Surgical Science Sweden

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Surgical Science Sweden

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Surgical Science

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

The idea behind Visa Class A and Surgical Science Sweden 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.

Check out your portfolio center.

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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.