Correlation Between Visa and Columbia

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

Diversification Opportunities for Visa and Columbia

0.0

Correlation Coefficient

Visa  Columbia

Pay attention - limited upside

The 3 months correlation between Visa and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Columbia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia 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 Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia has no effect on the direction of Visa i.e., Visa and Columbia go up and down completely randomly.

Pair Corralation between Visa and Columbia

If you would invest  28,322  in Visa Class A on October 23, 2024 and sell it today you would earn a total of  3,640  from holding Visa Class A or generate 12.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Columbia

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Columbia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Columbia is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Columbia

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

The idea behind Visa Class A and Columbia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.