Correlation Between Visa and Cardiol Therapeutics

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

Diversification Opportunities for Visa and Cardiol Therapeutics

-0.73

Correlation Coefficient

Visa  Cardiol Therapeutics

Pay attention - limited upside

The 3 months correlation between Visa and Cardiol is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cardiol Therapeutics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiol Therapeutics 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 Cardiol Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiol Therapeutics has no effect on the direction of Visa i.e., Visa and Cardiol Therapeutics go up and down completely randomly.

Pair Corralation between Visa and Cardiol Therapeutics

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.33 times more return on investment than Cardiol Therapeutics. However, Visa Class A is 3.02 times less risky than Cardiol Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Cardiol Therapeutics Class is currently generating about -0.23 per unit of risk. If you would invest  30,990  in Visa Class A on October 22, 2024 and sell it today you would earn a total of  972.00  from holding Visa Class A or generate 3.14% return on investment over 90 days.

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

Visa Class A  vs.  Cardiol Therapeutics Class

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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 February 2025.

Cardiol Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardiol Therapeutics Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Visa and Cardiol Therapeutics

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

The idea behind Visa Class A and Cardiol Therapeutics Class 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.