Correlation Between Visa and CNO Financial

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

Diversification Opportunities for Visa and CNO Financial

0.83

Correlation Coefficient

Visa  CNO Financial

Very poor diversification

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

Pair Corralation between Visa and CNO Financial

Taking into account the 90-day investment horizon Visa is expected to generate 2.49 times less return on investment than CNO Financial. But when comparing it to its historical volatility, Visa Class A is 1.39 times less risky than CNO Financial. It trades about 0.08 of its potential returns per unit of risk. CNO Financial Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,752  in CNO Financial Group on December 25, 2024 and sell it today you would earn a total of  469.00  from holding CNO Financial Group or generate 12.5% return on investment over 90 days.

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

Visa Class A  vs.  CNO Financial Group

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CNO Financial Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CNO Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and CNO Financial

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

The idea behind Visa Class A and CNO Financial Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..