Correlation Between Visa and Cia Brasileira

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

Diversification Opportunities for Visa and Cia Brasileira

-0.27

Correlation Coefficient

Visa  Cia Brasileira

Very good diversification

The 3 months correlation between Visa and Cia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de 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 Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Visa i.e., Visa and Cia Brasileira go up and down completely randomly.

Pair Corralation between Visa and Cia Brasileira

Taking into account the 90-day investment horizon Visa is expected to generate 11.25 times less return on investment than Cia Brasileira. But when comparing it to its historical volatility, Visa Class A is 3.58 times less risky than Cia Brasileira. It trades about 0.05 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Cia Brasileira de on October 22, 2024 and sell it today you would earn a total of  37.00  from holding Cia Brasileira de or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

Visa Class A  vs.  Cia Brasileira de

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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 February 2025.

Cia Brasileira de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Visa and Cia Brasileira

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

The idea behind Visa Class A and Cia Brasileira de 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.