Correlation Between Visa and Insight Select

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

Diversification Opportunities for Visa and Insight Select

0.09

Correlation Coefficient

Visa  Insight Select

Significant diversification

The 3 months correlation between Visa and Insight is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Insight Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insight Select Income 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 Insight Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insight Select Income has no effect on the direction of Visa i.e., Visa and Insight Select go up and down completely randomly.

Pair Corralation between Visa and Insight Select

If you would invest  34,123  in Visa Class A on December 2, 2024 and sell it today you would earn a total of  2,148  from holding Visa Class A or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	23.81%
Values	Daily Returns

Visa Class A  vs.  Insight Select Income

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 19 (%) 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.

Insight Select Income

Risk-Adjusted Performance

Solid

Over the last 90 days Insight Select Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly fragile basic indicators, Insight Select demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Insight Select

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

The idea behind Visa Class A and Insight Select Income 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..