Correlation Between Visa and Nordnet One

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

Diversification Opportunities for Visa and Nordnet One

0.4

Correlation Coefficient

Visa  Nordnet One

Very weak diversification

The 3 months correlation between Visa and Nordnet is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nordnet One Balansert in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet One Balansert 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 Nordnet One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet One Balansert has no effect on the direction of Visa i.e., Visa and Nordnet One go up and down completely randomly.

Pair Corralation between Visa and Nordnet One

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.31 times more return on investment than Nordnet One. However, Visa is 2.31 times more volatile than Nordnet One Balansert. It trades about 0.12 of its potential returns per unit of risk. Nordnet One Balansert is currently generating about -0.12 per unit of risk. If you would invest  31,669  in Visa Class A on December 21, 2024 and sell it today you would earn a total of  2,281  from holding Visa Class A or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Visa Class A  vs.  Nordnet One Balansert

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 9 (%) 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.

Nordnet One Balansert

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordnet One Balansert has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, Nordnet One is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Visa and Nordnet One

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

The idea behind Visa Class A and Nordnet One Balansert 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.