Correlation Between Visa and Infortrend Technology

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

Diversification Opportunities for Visa and Infortrend Technology

-0.04

Correlation Coefficient

Visa  Infortrend Technology

Good diversification

The 3 months correlation between Visa and Infortrend is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Infortrend Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infortrend Technology 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 Infortrend Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infortrend Technology has no effect on the direction of Visa i.e., Visa and Infortrend Technology go up and down completely randomly.

Pair Corralation between Visa and Infortrend Technology

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than Infortrend Technology. However, Visa Class A is 1.96 times less risky than Infortrend Technology. It trades about 0.05 of its potential returns per unit of risk. Infortrend Technology is currently generating about -0.24 per unit of risk. If you would invest  31,301  in Visa Class A on October 4, 2024 and sell it today you would earn a total of  303.00  from holding Visa Class A or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Visa Class A  vs.  Infortrend Technology

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Infortrend Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infortrend Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Infortrend Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Infortrend Technology

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

The idea behind Visa Class A and Infortrend Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.