Correlation Between Visa and Cohen Circle

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

Diversification Opportunities for Visa and Cohen Circle

0.42

Correlation Coefficient

Visa  Cohen Circle

Very weak diversification

The 3 months correlation between Visa and Cohen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cohen Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Circle Acquisition 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 Cohen Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Circle Acquisition has no effect on the direction of Visa i.e., Visa and Cohen Circle go up and down completely randomly.

Pair Corralation between Visa and Cohen Circle

Taking into account the 90-day investment horizon Visa is expected to generate 56.34 times less return on investment than Cohen Circle. But when comparing it to its historical volatility, Visa Class A is 7.64 times less risky than Cohen Circle. It trades about 0.06 of its potential returns per unit of risk. Cohen Circle Acquisition is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Cohen Circle Acquisition on December 5, 2024 and sell it today you would earn a total of  79.00  from holding Cohen Circle Acquisition or generate 98.75% return on investment over 90 days.

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

Visa Class A  vs.  Cohen Circle Acquisition

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 23 (%) 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.

Cohen Circle Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Circle Acquisition are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Cohen Circle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Cohen Circle

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

The idea behind Visa Class A and Cohen Circle Acquisition 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.