Correlation Between Visa and Investcorp Credit

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

Diversification Opportunities for Visa and Investcorp Credit

0.36

Correlation Coefficient

Visa  Investcorp Credit

Weak diversification

The 3 months correlation between Visa and Investcorp is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Investcorp Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Credit 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 Investcorp Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Credit has no effect on the direction of Visa i.e., Visa and Investcorp Credit go up and down completely randomly.

Pair Corralation between Visa and Investcorp Credit

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.88 times more return on investment than Investcorp Credit. However, Visa Class A is 1.14 times less risky than Investcorp Credit. It trades about 0.12 of its potential returns per unit of risk. Investcorp Credit Management is currently generating about 0.0 per unit of risk. If you would invest  26,440  in Visa Class A on October 7, 2024 and sell it today you would earn a total of  5,051  from holding Visa Class A or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Investcorp Credit Management

Visa Class A

Risk-Adjusted Performance

16 of 100

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 showed solid returns over the last few months and may actually be approaching a breakup point.

Investcorp Credit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Investcorp Credit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Investcorp Credit

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

The idea behind Visa Class A and Investcorp Credit Management 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.