Correlation Between Visa and AXA SA

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

Diversification Opportunities for Visa and AXA SA

0.43

Correlation Coefficient

Visa  AXA SA

Very weak diversification

The 3 months correlation between Visa and AXA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Visa i.e., Visa and AXA SA go up and down completely randomly.

Pair Corralation between Visa and AXA SA

Taking into account the 90-day investment horizon Visa is expected to generate 2.76 times less return on investment than AXA SA. In addition to that, Visa is 1.01 times more volatile than AXA SA. It trades about 0.1 of its total potential returns per unit of risk. AXA SA is currently generating about 0.27 per unit of volatility. If you would invest  3,368  in AXA SA on December 22, 2024 and sell it today you would earn a total of  599.00  from holding AXA SA or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  AXA SA

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 7 (%) 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 April 2025.

AXA SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AXA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and AXA SA

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

The idea behind Visa Class A and AXA SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.