Correlation Between Visa and AXA World

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

Diversification Opportunities for Visa and AXA World

-0.81

Correlation Coefficient

Visa  AXA World

Pay attention - limited upside

The 3 months correlation between Visa and AXA is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AXA World Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA World Funds 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 AXA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA World Funds has no effect on the direction of Visa i.e., Visa and AXA World go up and down completely randomly.

Pair Corralation between Visa and AXA World

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.94 times more return on investment than AXA World. However, Visa is 2.94 times more volatile than AXA World Funds. It trades about 0.08 of its potential returns per unit of risk. AXA World Funds is currently generating about -0.04 per unit of risk. If you would invest  26,972  in Visa Class A on October 12, 2024 and sell it today you would earn a total of  4,288  from holding Visa Class A or generate 15.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.4%
Values	Daily Returns

Visa Class A  vs.  AXA World Funds

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.

AXA World Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA World Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, AXA World is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and AXA World

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

The idea behind Visa Class A and AXA World Funds 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..