Correlation Between Visa and DI Global

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

Diversification Opportunities for Visa and DI Global

0.24

Correlation Coefficient

Visa  DI Global

Modest diversification

The 3 months correlation between Visa and DKIGSFUT is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and DI Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DI Global Sustainable 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 DI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DI Global Sustainable has no effect on the direction of Visa i.e., Visa and DI Global go up and down completely randomly.

Pair Corralation between Visa and DI Global

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.18 times more return on investment than DI Global. However, Visa is 1.18 times more volatile than DI Global Sustainable. It trades about 0.1 of its potential returns per unit of risk. DI Global Sustainable is currently generating about -0.04 per unit of risk. If you would invest  31,669  in Visa Class A on December 22, 2024 and sell it today you would earn a total of  1,897  from holding Visa Class A or generate 5.99% return on investment over 90 days.

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

Visa Class A  vs.  DI Global Sustainable

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 7 (%) 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.

DI Global Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days DI Global Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DI Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and DI Global

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

The idea behind Visa Class A and DI Global Sustainable 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..