Correlation Between Visa and Chesapeake Finl

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

Diversification Opportunities for Visa and Chesapeake Finl

0.54

Correlation Coefficient

Visa  Chesapeake Finl

Very weak diversification

The 3 months correlation between Visa and Chesapeake is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs 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 Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of Visa i.e., Visa and Chesapeake Finl go up and down completely randomly.

Pair Corralation between Visa and Chesapeake Finl

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.91 times more return on investment than Chesapeake Finl. However, Visa Class A is 1.09 times less risky than Chesapeake Finl. It trades about 0.13 of its potential returns per unit of risk. Chesapeake Finl Shs is currently generating about 0.05 per unit of risk. If you would invest  31,812  in Visa Class A on December 27, 2024 and sell it today you would earn a total of  2,606  from holding Visa Class A or generate 8.19% 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.  Chesapeake Finl Shs

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 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 April 2025.

Chesapeake Finl Shs

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Finl Shs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Chesapeake Finl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Chesapeake Finl

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

The idea behind Visa Class A and Chesapeake Finl Shs 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.