Correlation Between Visa and Becle SAB

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

Diversification Opportunities for Visa and Becle SAB

-0.69

Correlation Coefficient

Visa  Becle SAB

Excellent diversification

The 3 months correlation between Visa and Becle is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Becle SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becle SAB de 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 Becle SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becle SAB de has no effect on the direction of Visa i.e., Visa and Becle SAB go up and down completely randomly.

Pair Corralation between Visa and Becle SAB

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Becle SAB. However, Visa Class A is 2.41 times less risky than Becle SAB. It trades about 0.06 of its potential returns per unit of risk. Becle SAB de is currently generating about -0.5 per unit of risk. If you would invest  32,091  in Visa Class A on October 26, 2024 and sell it today you would earn a total of  265.00  from holding Visa Class A or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Visa Class A  vs.  Becle SAB de

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Becle SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becle SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa and Becle SAB

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

The idea behind Visa Class A and Becle SAB de 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.