Correlation Between Visa and Nationwide Investor

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

Diversification Opportunities for Visa and Nationwide Investor

0.16

Correlation Coefficient

Visa  Nationwide Investor

Average diversification

The 3 months correlation between Visa and Nationwide is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor 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 Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of Visa i.e., Visa and Nationwide Investor go up and down completely randomly.

Pair Corralation between Visa and Nationwide Investor

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.48 times more return on investment than Nationwide Investor. However, Visa Class A is 2.08 times less risky than Nationwide Investor. It trades about 0.25 of its potential returns per unit of risk. Nationwide Investor Destinations is currently generating about -0.14 per unit of risk. If you would invest  28,365  in Visa Class A on September 27, 2024 and sell it today you would earn a total of  3,700  from holding Visa Class A or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Visa Class A  vs.  Nationwide Investor Destinatio

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

Nationwide Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Investor Destinations has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Visa and Nationwide Investor

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

The idea behind Visa Class A and Nationwide Investor Destinations 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.