Correlation Between Visa and RBC Dividend

Can any of the company-specific risk be diversified away by investing in both Visa and RBC Dividend 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 RBC Dividend 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 RBC Dividend, you can compare the effects of market volatilities on Visa and RBC Dividend 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 RBC Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and RBC Dividend.

Diversification Opportunities for Visa and RBC Dividend

0.33

Correlation Coefficient

Visa  RBC Dividend

Weak diversification

The 3 months correlation between Visa and RBC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and RBC Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Dividend 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 RBC Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Dividend has no effect on the direction of Visa i.e., Visa and RBC Dividend go up and down completely randomly.

Pair Corralation between Visa and RBC Dividend

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.41 times more return on investment than RBC Dividend. However, Visa is 1.41 times more volatile than RBC Dividend. It trades about 0.13 of its potential returns per unit of risk. RBC Dividend is currently generating about -0.04 per unit of risk. If you would invest  31,478  in Visa Class A on December 30, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Visa Class A  vs.  RBC Dividend

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) 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.

RBC Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Dividend has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, RBC Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and RBC Dividend

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

The idea behind Visa Class A and RBC Dividend 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.