Correlation Between Visa and XAC Automation

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

Diversification Opportunities for Visa and XAC Automation

-0.22

Correlation Coefficient

Visa  XAC Automation

Very good diversification

The 3 months correlation between Visa and XAC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation 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 XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Visa i.e., Visa and XAC Automation go up and down completely randomly.

Pair Corralation between Visa and XAC Automation

Taking into account the 90-day investment horizon Visa is expected to generate 1.95 times less return on investment than XAC Automation. But when comparing it to its historical volatility, Visa Class A is 1.57 times less risky than XAC Automation. It trades about 0.14 of its potential returns per unit of risk. XAC Automation is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,430  in XAC Automation on December 4, 2024 and sell it today you would earn a total of  125.00  from holding XAC Automation or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  XAC Automation

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) 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.

XAC Automation

Risk-Adjusted Performance

Very Weak

Over the last 90 days XAC Automation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, XAC Automation 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 XAC Automation

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

The idea behind Visa Class A and XAC Automation 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.