Correlation Between Visa and In Style

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

Diversification Opportunities for Visa and In Style

0.27

Correlation Coefficient

Visa  In Style

Modest diversification

The 3 months correlation between Visa and ITS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and in Style Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on in Style Group 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 In Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of in Style Group has no effect on the direction of Visa i.e., Visa and In Style go up and down completely randomly.

Pair Corralation between Visa and In Style

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than In Style. However, Visa Class A is 2.29 times less risky than In Style. It trades about 0.14 of its potential returns per unit of risk. in Style Group is currently generating about 0.03 per unit of risk. If you would invest  28,014  in Visa Class A on October 14, 2024 and sell it today you would earn a total of  2,757  from holding Visa Class A or generate 9.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Visa Class A  vs.  in Style Group

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 February 2025.

in Style Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in in Style Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, In Style is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and In Style

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

The idea behind Visa Class A and in Style Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.