Correlation Between Visa and AIRA Capital

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

Diversification Opportunities for Visa and AIRA Capital

-0.6

Correlation Coefficient

Visa  AIRA Capital

Excellent diversification

The 3 months correlation between Visa and AIRA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AIRA Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRA Capital Public 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 AIRA Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRA Capital Public has no effect on the direction of Visa i.e., Visa and AIRA Capital go up and down completely randomly.

Pair Corralation between Visa and AIRA Capital

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the AIRA Capital. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 7.04 times less risky than AIRA Capital. The stock trades about -0.14 of its potential returns per unit of risk. The AIRA Capital Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  119.00  in AIRA Capital Public on October 15, 2024 and sell it today you would earn a total of  1.00  from holding AIRA Capital Public or generate 0.84% return on investment over 90 days.

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

Visa Class A  vs.  AIRA Capital Public

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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.

AIRA Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIRA Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Visa and AIRA Capital

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

The idea behind Visa Class A and AIRA Capital Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.