Correlation Between Visa and HAL Trust

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

Diversification Opportunities for Visa and HAL Trust

0.08

Correlation Coefficient

Visa  HAL Trust

Significant diversification

The 3 months correlation between Visa and HAL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and HAL Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAL Trust 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 HAL Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAL Trust has no effect on the direction of Visa i.e., Visa and HAL Trust go up and down completely randomly.

Pair Corralation between Visa and HAL Trust

Taking into account the 90-day investment horizon Visa is expected to generate 1.61 times less return on investment than HAL Trust. In addition to that, Visa is 1.31 times more volatile than HAL Trust. It trades about 0.08 of its total potential returns per unit of risk. HAL Trust is currently generating about 0.17 per unit of volatility. If you would invest  11,320  in HAL Trust on December 17, 2024 and sell it today you would earn a total of  1,060  from holding HAL Trust or generate 9.36% return on investment over 90 days.

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

Visa Class A  vs.  HAL Trust

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.

HAL Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAL Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, HAL Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and HAL Trust

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

The idea behind Visa Class A and HAL Trust 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.