Correlation Between Visa and Conair

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

Diversification Opportunities for Visa and Conair

-0.3

Correlation Coefficient

Visa  Conair

Very good diversification

The 3 months correlation between Visa and Conair is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Conair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conair 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 Conair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conair has no effect on the direction of Visa i.e., Visa and Conair go up and down completely randomly.

Pair Corralation between Visa and Conair

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Conair. However, Visa Class A is 3.33 times less risky than Conair. It trades about 0.08 of its potential returns per unit of risk. Conair is currently generating about -0.01 per unit of risk. If you would invest  21,956  in Visa Class A on October 8, 2024 and sell it today you would earn a total of  9,348  from holding Visa Class A or generate 42.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Visa Class A  vs.  Conair

Visa Class A

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Conair

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Conair are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, Conair may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and Conair

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

The idea behind Visa Class A and Conair 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 Anywhere module to track or share privately all of your investments from the convenience of any device.