Correlation Between Visa and Cingulate Warrants

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

Diversification Opportunities for Visa and Cingulate Warrants

-0.76

Correlation Coefficient

Visa  Cingulate Warrants

Pay attention - limited upside

The 3 months correlation between Visa and Cingulate is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants 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 Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of Visa i.e., Visa and Cingulate Warrants go up and down completely randomly.

Pair Corralation between Visa and Cingulate Warrants

Taking into account the 90-day investment horizon Visa is expected to generate 11.25 times less return on investment than Cingulate Warrants. But when comparing it to its historical volatility, Visa Class A is 24.83 times less risky than Cingulate Warrants. It trades about 0.07 of its potential returns per unit of risk. Cingulate Warrants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.49  in Cingulate Warrants on September 12, 2024 and sell it today you would lose (0.86) from holding Cingulate Warrants or give up 19.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Cingulate Warrants

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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 January 2025.

Cingulate Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cingulate Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Cingulate Warrants is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Cingulate Warrants

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

The idea behind Visa Class A and Cingulate Warrants 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.