Correlation Between Visa and JAIZ BANK

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

Diversification Opportunities for Visa and JAIZ BANK

0.31

Correlation Coefficient

Visa  JAIZ BANK

Weak diversification

The 3 months correlation between Visa and JAIZ is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and JAIZ BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAIZ BANK PLC 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 JAIZ BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAIZ BANK PLC has no effect on the direction of Visa i.e., Visa and JAIZ BANK go up and down completely randomly.

Pair Corralation between Visa and JAIZ BANK

Taking into account the 90-day investment horizon Visa is expected to generate 16.96 times less return on investment than JAIZ BANK. But when comparing it to its historical volatility, Visa Class A is 3.12 times less risky than JAIZ BANK. It trades about 0.09 of its potential returns per unit of risk. JAIZ BANK PLC is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  240.00  in JAIZ BANK PLC on October 9, 2024 and sell it today you would earn a total of  68.00  from holding JAIZ BANK PLC or generate 28.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Visa Class A  vs.  JAIZ BANK PLC

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.

JAIZ BANK PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAIZ BANK PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, JAIZ BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and JAIZ BANK

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

The idea behind Visa Class A and JAIZ BANK PLC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.