Correlation Between Visa and LIVESTOCK FEED

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

Diversification Opportunities for Visa and LIVESTOCK FEED

0.02

Correlation Coefficient

Visa  LIVESTOCK FEED

Significant diversification

The 3 months correlation between Visa and LIVESTOCK is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and LIVESTOCK FEED LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIVESTOCK FEED LTD 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 LIVESTOCK FEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIVESTOCK FEED LTD has no effect on the direction of Visa i.e., Visa and LIVESTOCK FEED go up and down completely randomly.

Pair Corralation between Visa and LIVESTOCK FEED

Taking into account the 90-day investment horizon Visa is expected to generate 1.21 times less return on investment than LIVESTOCK FEED. In addition to that, Visa is 1.54 times more volatile than LIVESTOCK FEED LTD. It trades about 0.14 of its total potential returns per unit of risk. LIVESTOCK FEED LTD is currently generating about 0.26 per unit of volatility. If you would invest  1,850  in LIVESTOCK FEED LTD on September 27, 2024 and sell it today you would earn a total of  65.00  from holding LIVESTOCK FEED LTD or generate 3.51% return on investment over 90 days.

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

Visa Class A  vs.  LIVESTOCK FEED LTD

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

LIVESTOCK FEED LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LIVESTOCK FEED LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, LIVESTOCK FEED is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and LIVESTOCK FEED

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

The idea behind Visa Class A and LIVESTOCK FEED LTD 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.