Correlation Between Visa and Banco De

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

Diversification Opportunities for Visa and Banco De

0.67

Correlation Coefficient

Visa  Banco De

Poor diversification

The 3 months correlation between Visa and Banco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Banco de Credito in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Credito 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 Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Credito has no effect on the direction of Visa i.e., Visa and Banco De go up and down completely randomly.

Pair Corralation between Visa and Banco De

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.79 times more return on investment than Banco De. However, Visa Class A is 1.26 times less risky than Banco De. It trades about 0.16 of its potential returns per unit of risk. Banco de Credito is currently generating about 0.08 per unit of risk. If you would invest  26,058  in Visa Class A on October 25, 2024 and sell it today you would earn a total of  6,298  from holding Visa Class A or generate 24.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.56%
Values	Daily Returns

Visa Class A  vs.  Banco de Credito

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Banco de Credito

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and Banco De

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

The idea behind Visa Class A and Banco de Credito 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..