Correlation Between Visa and Big Rock

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

Diversification Opportunities for Visa and Big Rock

0.59

Correlation Coefficient

Visa  Big Rock

Very weak diversification

The 3 months correlation between Visa and Big is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery 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 Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of Visa i.e., Visa and Big Rock go up and down completely randomly.

Pair Corralation between Visa and Big Rock

Taking into account the 90-day investment horizon Visa is expected to generate 1.24 times less return on investment than Big Rock. But when comparing it to its historical volatility, Visa Class A is 5.36 times less risky than Big Rock. It trades about 0.1 of its potential returns per unit of risk. Big Rock Brewery is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  112.00  in Big Rock Brewery on December 22, 2024 and sell it today you would lose (2.00) from holding Big Rock Brewery or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Big Rock Brewery

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 7 (%) 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.

Big Rock Brewery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Rock Brewery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Big Rock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Big Rock

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

The idea behind Visa Class A and Big Rock Brewery 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.