Correlation Between Visa and Bdvex

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

Diversification Opportunities for Visa and Bdvex

-0.17

Correlation Coefficient

Visa  Bdvex

Good diversification

The 3 months correlation between Visa and Bdvex is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bdvex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bdvex 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 Bdvex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bdvex has no effect on the direction of Visa i.e., Visa and Bdvex go up and down completely randomly.

Pair Corralation between Visa and Bdvex

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.02 times more return on investment than Bdvex. However, Visa is 1.02 times more volatile than Bdvex. It trades about -0.11 of its potential returns per unit of risk. Bdvex is currently generating about -0.25 per unit of risk. If you would invest  35,064  in Visa Class A on December 10, 2024 and sell it today you would lose (916.00) from holding Visa Class A or give up 2.61% of portfolio value over 90 days.

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

Visa Class A  vs.  Bdvex

Visa Class A

Risk-Adjusted Performance

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 April 2025.

Bdvex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bdvex has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Visa and Bdvex

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

The idea behind Visa Class A and Bdvex 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.