Correlation Between Visa and AA Mission

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

Diversification Opportunities for Visa and AA Mission

0.29

Correlation Coefficient

Visa  AA Mission

Modest diversification

The 3 months correlation between Visa and AAM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AA Mission Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AA Mission Acquisition 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 AA Mission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AA Mission Acquisition has no effect on the direction of Visa i.e., Visa and AA Mission go up and down completely randomly.

Pair Corralation between Visa and AA Mission

Taking into account the 90-day investment horizon Visa Class A is expected to generate 9.54 times more return on investment than AA Mission. However, Visa is 9.54 times more volatile than AA Mission Acquisition. It trades about 0.09 of its potential returns per unit of risk. AA Mission Acquisition is currently generating about 0.23 per unit of risk. If you would invest  31,488  in Visa Class A on October 20, 2024 and sell it today you would earn a total of  474.00  from holding Visa Class A or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  AA Mission Acquisition

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 February 2025.

AA Mission Acquisition

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AA Mission Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AA Mission is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and AA Mission

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

The idea behind Visa Class A and AA Mission Acquisition 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.