Correlation Between Visa and Catalyst/millburn

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

Diversification Opportunities for Visa and Catalyst/millburn

-0.45

Correlation Coefficient

Visa  Catalyst/millburn

Very good diversification

The 3 months correlation between Visa and Catalyst/millburn is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Catalystmillburn Dynamic Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Dyn 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Dyn has no effect on the direction of Visa i.e., Visa and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Visa and Catalyst/millburn

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.76 times more return on investment than Catalyst/millburn. However, Visa Class A is 1.31 times less risky than Catalyst/millburn. It trades about 0.09 of its potential returns per unit of risk. Catalystmillburn Dynamic Commodity is currently generating about -0.26 per unit of risk. If you would invest  30,908  in Visa Class A on October 6, 2024 and sell it today you would earn a total of  532.00  from holding Visa Class A or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Catalystmillburn Dynamic Commo

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.

Catalystmillburn Dyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalystmillburn Dynamic Commodity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Visa and Catalyst/millburn

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

The idea behind Visa Class A and Catalystmillburn Dynamic Commodity 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.