Correlation Between Visa and Nationwide Bailard

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

Diversification Opportunities for Visa and Nationwide Bailard

-0.07

Correlation Coefficient

Visa  Nationwide Bailard

Good diversification

The 3 months correlation between Visa and Nationwide is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nationwide Bailard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bailard 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 Nationwide Bailard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bailard has no effect on the direction of Visa i.e., Visa and Nationwide Bailard go up and down completely randomly.

Pair Corralation between Visa and Nationwide Bailard

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.65 times more return on investment than Nationwide Bailard. However, Visa Class A is 1.54 times less risky than Nationwide Bailard. It trades about 0.09 of its potential returns per unit of risk. Nationwide Bailard Technology is currently generating about 0.06 per unit of risk. If you would invest  24,281  in Visa Class A on October 8, 2024 and sell it today you would earn a total of  7,210  from holding Visa Class A or generate 29.69% return on investment over 90 days.

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

Visa Class A  vs.  Nationwide Bailard Technology

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.

Nationwide Bailard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Bailard Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Visa and Nationwide Bailard

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

The idea behind Visa Class A and Nationwide Bailard Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .