Correlation Between Visa and Alexander Marine

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

Diversification Opportunities for Visa and Alexander Marine

-0.9

Correlation Coefficient

Visa  Alexander Marine

Pay attention - limited upside

The 3 months correlation between Visa and Alexander is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine 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 Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Visa i.e., Visa and Alexander Marine go up and down completely randomly.

Pair Corralation between Visa and Alexander Marine

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.71 times more return on investment than Alexander Marine. However, Visa Class A is 1.4 times less risky than Alexander Marine. It trades about 0.12 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.29 per unit of risk. If you would invest  28,793  in Visa Class A on September 18, 2024 and sell it today you would earn a total of  2,796  from holding Visa Class A or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Alexander Marine Co

Visa Class A

Risk-Adjusted Performance

9 of 100

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alexander Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Marine Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Visa and Alexander Marine

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

The idea behind Visa Class A and Alexander Marine Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.