Correlation Between Visa and Fidelity Global

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

Diversification Opportunities for Visa and Fidelity Global

-0.13

Correlation Coefficient

Visa  Fidelity Global

Good diversification

The 3 months correlation between Visa and Fidelity is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fidelity Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Monthly 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 Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Monthly has no effect on the direction of Visa i.e., Visa and Fidelity Global go up and down completely randomly.

Pair Corralation between Visa and Fidelity Global

Taking into account the 90-day investment horizon Visa is expected to generate 1.07 times less return on investment than Fidelity Global. In addition to that, Visa is 1.93 times more volatile than Fidelity Global Monthly. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Global Monthly is currently generating about 0.11 per unit of volatility. If you would invest  1,389  in Fidelity Global Monthly on October 22, 2024 and sell it today you would earn a total of  12.00  from holding Fidelity Global Monthly or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Fidelity Global Monthly

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.

Fidelity Global Monthly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Global Monthly has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fidelity Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and Fidelity Global

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

The idea behind Visa Class A and Fidelity Global Monthly 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.