Correlation Between Visa and Brookfield Property

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

Diversification Opportunities for Visa and Brookfield Property

0.87

Correlation Coefficient

Visa  Brookfield Property

Very poor diversification

The 3 months correlation between Visa and Brookfield is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property 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 Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of Visa i.e., Visa and Brookfield Property go up and down completely randomly.

Pair Corralation between Visa and Brookfield Property

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.95 times more return on investment than Brookfield Property. However, Visa Class A is 1.05 times less risky than Brookfield Property. It trades about 0.13 of its potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.08 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

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

Visa Class A  vs.  Brookfield Property Partners

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 10 (%) 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.

Brookfield Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brookfield Property is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and Brookfield Property

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

The idea behind Visa Class A and Brookfield Property Partners 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.