Correlation Between Visa and Artisan International

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

Diversification Opportunities for Visa and Artisan International

0.67

Correlation Coefficient

Visa  Artisan International

Poor diversification

The 3 months correlation between Visa and Artisan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Artisan International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan International 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 Artisan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan International has no effect on the direction of Visa i.e., Visa and Artisan International go up and down completely randomly.

Pair Corralation between Visa and Artisan International

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.58 times more return on investment than Artisan International. However, Visa is 1.58 times more volatile than Artisan International Value. It trades about 0.33 of its potential returns per unit of risk. Artisan International Value is currently generating about 0.07 per unit of risk. If you would invest  34,247  in Visa Class A on December 1, 2024 and sell it today you would earn a total of  2,024  from holding Visa Class A or generate 5.91% return on investment over 90 days.

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

Visa Class A  vs.  Artisan International Value

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 19 (%) 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.

Artisan International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan International Value are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Artisan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Artisan International

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

The idea behind Visa Class A and Artisan International Value 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.