Correlation Between Visa and Frost Total

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

Diversification Opportunities for Visa and Frost Total

-0.58

Correlation Coefficient

Visa  Frost Total

Excellent diversification

The 3 months correlation between Visa and Frost is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Frost Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Total Return 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 Frost Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Total Return has no effect on the direction of Visa i.e., Visa and Frost Total go up and down completely randomly.

Pair Corralation between Visa and Frost Total

Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.81 times more return on investment than Frost Total. However, Visa is 3.81 times more volatile than Frost Total Return. It trades about 0.09 of its potential returns per unit of risk. Frost Total Return is currently generating about 0.11 per unit of risk. If you would invest  20,311  in Visa Class A on September 17, 2024 and sell it today you would earn a total of  11,163  from holding Visa Class A or generate 54.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Visa Class A  vs.  Frost Total Return

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Frost Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frost Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Frost Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Frost Total

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

The idea behind Visa Class A and Frost Total Return 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.