Correlation Between Visa and Core Molding

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

Diversification Opportunities for Visa and Core Molding

-0.83

Correlation Coefficient

Visa  Core Molding

Pay attention - limited upside

The 3 months correlation between Visa and Core is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Visa i.e., Visa and Core Molding go up and down completely randomly.

Pair Corralation between Visa and Core Molding

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.38 times more return on investment than Core Molding. However, Visa Class A is 2.66 times less risky than Core Molding. It trades about 0.33 of its potential returns per unit of risk. Core Molding Technologies is currently generating about -0.16 per unit of risk. If you would invest  34,247  in Visa Class A on December 1, 2024 and sell it today you would earn a total of  2,024  from holding Visa Class A or generate 5.91% return on investment over 90 days.

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

Visa Class A  vs.  Core Molding Technologies

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 19 (%) 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.

Core Molding Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and Core Molding

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

The idea behind Visa Class A and Core Molding Technologies 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 Correlations module to find global opportunities by holding instruments from different markets.