Correlation Between Visa and ESACW Old

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

Diversification Opportunities for Visa and ESACW Old

-0.12

Correlation Coefficient

Visa  ESACW Old

Good diversification

The 3 months correlation between Visa and ESACW is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ESACW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESACW Old 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 ESACW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESACW Old has no effect on the direction of Visa i.e., Visa and ESACW Old go up and down completely randomly.

Pair Corralation between Visa and ESACW Old

Taking into account the 90-day investment horizon Visa is expected to generate 58.1 times less return on investment than ESACW Old. But when comparing it to its historical volatility, Visa Class A is 31.86 times less risky than ESACW Old. It trades about 0.08 of its potential returns per unit of risk. ESACW Old is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5.50  in ESACW Old on October 10, 2024 and sell it today you would earn a total of  5.50  from holding ESACW Old or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.92%
Values	Daily Returns

Visa Class A  vs.  ESACW Old

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.

ESACW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESACW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, ESACW Old is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and ESACW Old

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

The idea behind Visa Class A and ESACW Old 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.