Correlation Between Visa and BurgerFi International

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

Diversification Opportunities for Visa and BurgerFi International

0.12

Correlation Coefficient

Visa  BurgerFi International

Average diversification

The 3 months correlation between Visa and BurgerFi is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BurgerFi International LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BurgerFi 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 BurgerFi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BurgerFi International has no effect on the direction of Visa i.e., Visa and BurgerFi International go up and down completely randomly.

Pair Corralation between Visa and BurgerFi International

Taking into account the 90-day investment horizon Visa is expected to generate 24.19 times less return on investment than BurgerFi International. But when comparing it to its historical volatility, Visa Class A is 24.67 times less risky than BurgerFi International. It trades about 0.1 of its potential returns per unit of risk. BurgerFi International LLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.57  in BurgerFi International LLC on September 27, 2024 and sell it today you would lose (1.67) from holding BurgerFi International LLC or give up 64.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.12%
Values	Daily Returns

Visa Class A  vs.  BurgerFi International LLC

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

BurgerFi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BurgerFi International LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, BurgerFi International 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 BurgerFi International

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

The idea behind Visa Class A and BurgerFi International LLC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.