Correlation Between Visa and Bewhere Holdings

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

Diversification Opportunities for Visa and Bewhere Holdings

0.48

Correlation Coefficient

Visa  Bewhere Holdings

Very weak diversification

The 3 months correlation between Visa and Bewhere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bewhere Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bewhere Holdings 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 Bewhere Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bewhere Holdings has no effect on the direction of Visa i.e., Visa and Bewhere Holdings go up and down completely randomly.

Pair Corralation between Visa and Bewhere Holdings

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.28 times more return on investment than Bewhere Holdings. However, Visa Class A is 3.54 times less risky than Bewhere Holdings. It trades about 0.16 of its potential returns per unit of risk. Bewhere Holdings is currently generating about 0.01 per unit of risk. If you would invest  27,801  in Visa Class A on September 3, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

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

Visa Class A  vs.  Bewhere Holdings

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Bewhere Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bewhere Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bewhere Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Bewhere Holdings

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

The idea behind Visa Class A and Bewhere Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.