Correlation Between Visa and Big Screen

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

Diversification Opportunities for Visa and Big Screen

-0.49

Correlation Coefficient

Visa  Big Screen

Very good diversification

The 3 months correlation between Visa and Big is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Big Screen Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Screen Entertainment 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 Screen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Screen Entertainment has no effect on the direction of Visa i.e., Visa and Big Screen go up and down completely randomly.

Pair Corralation between Visa and Big Screen

Taking into account the 90-day investment horizon Visa is expected to generate 2.42 times less return on investment than Big Screen. But when comparing it to its historical volatility, Visa Class A is 19.12 times less risky than Big Screen. It trades about 0.14 of its potential returns per unit of risk. Big Screen Entertainment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Big Screen Entertainment on December 4, 2024 and sell it today you would lose (0.48) from holding Big Screen Entertainment or give up 24.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Big Screen Entertainment

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Big Screen Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Screen Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unfluctuating technical and fundamental indicators, Big Screen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Big Screen

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

The idea behind Visa Class A and Big Screen Entertainment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.