Correlation Between Visa and Grupo Catalana

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

Diversification Opportunities for Visa and Grupo Catalana

0.77

Correlation Coefficient

Visa  Grupo Catalana

Poor diversification

The 3 months correlation between Visa and Grupo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Grupo Catalana Occidente in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Catalana Occidente 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 Grupo Catalana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Catalana Occidente has no effect on the direction of Visa i.e., Visa and Grupo Catalana go up and down completely randomly.

Pair Corralation between Visa and Grupo Catalana

Taking into account the 90-day investment horizon Visa is expected to generate 1.95 times less return on investment than Grupo Catalana. In addition to that, Visa is 1.13 times more volatile than Grupo Catalana Occidente. It trades about 0.08 of its total potential returns per unit of risk. Grupo Catalana Occidente is currently generating about 0.18 per unit of volatility. If you would invest  3,649  in Grupo Catalana Occidente on December 17, 2024 and sell it today you would earn a total of  416.00  from holding Grupo Catalana Occidente or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Visa Class A  vs.  Grupo Catalana Occidente

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grupo Catalana Occidente

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Catalana Occidente are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grupo Catalana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Grupo Catalana

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

The idea behind Visa Class A and Grupo Catalana Occidente 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.