Correlation Between Visa and Green Cures

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

Diversification Opportunities for Visa and Green Cures

-0.22

Correlation Coefficient

Visa  Green Cures

Very good diversification

The 3 months correlation between Visa and Green is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Green Cures Botanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cures Botanical 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 Green Cures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cures Botanical has no effect on the direction of Visa i.e., Visa and Green Cures go up and down completely randomly.

Pair Corralation between Visa and Green Cures

Taking into account the 90-day investment horizon Visa is expected to generate 20.19 times less return on investment than Green Cures. But when comparing it to its historical volatility, Visa Class A is 54.71 times less risky than Green Cures. It trades about 0.29 of its potential returns per unit of risk. Green Cures Botanical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Green Cures Botanical on November 29, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.

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

Visa Class A  vs.  Green Cures Botanical

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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 March 2025.

Green Cures Botanical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Green Cures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Green Cures

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

The idea behind Visa Class A and Green Cures Botanical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.