Correlation Between Visa and BeMetals Corp

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

Diversification Opportunities for Visa and BeMetals Corp

-0.7

Correlation Coefficient

Visa  BeMetals Corp

Excellent diversification

The 3 months correlation between Visa and BeMetals is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BeMetals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeMetals Corp 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 BeMetals Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeMetals Corp has no effect on the direction of Visa i.e., Visa and BeMetals Corp go up and down completely randomly.

Pair Corralation between Visa and BeMetals Corp

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.17 times more return on investment than BeMetals Corp. However, Visa Class A is 5.84 times less risky than BeMetals Corp. It trades about 0.09 of its potential returns per unit of risk. BeMetals Corp is currently generating about 0.0 per unit of risk. If you would invest  20,933  in Visa Class A on September 25, 2024 and sell it today you would earn a total of  10,789  from holding Visa Class A or generate 51.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Visa Class A  vs.  BeMetals Corp

Visa Class A

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) 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.

BeMetals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeMetals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Visa and BeMetals Corp

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

The idea behind Visa Class A and BeMetals Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.