Correlation Between Visa and Altshuler Shaham

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

Diversification Opportunities for Visa and Altshuler Shaham

0.85

Correlation Coefficient

Visa  Altshuler Shaham

Very poor diversification

The 3 months correlation between Visa and Altshuler is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Altshuler Shaham Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altshuler Shaham Fin 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 Altshuler Shaham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altshuler Shaham Fin has no effect on the direction of Visa i.e., Visa and Altshuler Shaham go up and down completely randomly.

Pair Corralation between Visa and Altshuler Shaham

Taking into account the 90-day investment horizon Visa is expected to generate 3.68 times less return on investment than Altshuler Shaham. But when comparing it to its historical volatility, Visa Class A is 1.77 times less risky than Altshuler Shaham. It trades about 0.11 of its potential returns per unit of risk. Altshuler Shaham Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  50,030  in Altshuler Shaham Financial on September 15, 2024 and sell it today you would earn a total of  12,560  from holding Altshuler Shaham Financial or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	73.44%
Values	Daily Returns

Visa Class A  vs.  Altshuler Shaham Financial

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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.

Altshuler Shaham Fin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altshuler Shaham Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Altshuler Shaham sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Altshuler Shaham

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

The idea behind Visa Class A and Altshuler Shaham Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.