Correlation Between Visa and BioLife Sciences

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

Diversification Opportunities for Visa and BioLife Sciences

0.0

Correlation Coefficient

Visa  BioLife Sciences

Pay attention - limited upside

The 3 months correlation between Visa and BioLife is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BioLife Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLife Sciences 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 BioLife Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLife Sciences has no effect on the direction of Visa i.e., Visa and BioLife Sciences go up and down completely randomly.

Pair Corralation between Visa and BioLife Sciences

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.09 times more return on investment than BioLife Sciences. However, Visa Class A is 11.69 times less risky than BioLife Sciences. It trades about 0.15 of its potential returns per unit of risk. BioLife Sciences is currently generating about -0.13 per unit of risk. If you would invest  31,812  in Visa Class A on December 27, 2024 and sell it today you would earn a total of  3,174  from holding Visa Class A or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  BioLife Sciences

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 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.

BioLife Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLife Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Visa and BioLife Sciences

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

The idea behind Visa Class A and BioLife Sciences 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.