Correlation Between Visa and Optex Systems

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

Diversification Opportunities for Visa and Optex Systems

-0.68

Correlation Coefficient

Visa  Optex Systems

Excellent diversification

The 3 months correlation between Visa and Optex is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Optex Systems Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optex Systems Holdings, 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 Optex Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optex Systems Holdings, has no effect on the direction of Visa i.e., Visa and Optex Systems go up and down completely randomly.

Pair Corralation between Visa and Optex Systems

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.32 times more return on investment than Optex Systems. However, Visa Class A is 3.17 times less risky than Optex Systems. It trades about 0.25 of its potential returns per unit of risk. Optex Systems Holdings, is currently generating about -0.21 per unit of risk. If you would invest  31,612  in Visa Class A on December 1, 2024 and sell it today you would earn a total of  4,659  from holding Visa Class A or generate 14.74% return on investment over 90 days.

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

Visa Class A  vs.  Optex Systems Holdings,

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.

Optex Systems Holdings,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optex Systems Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and Optex Systems

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

The idea behind Visa Class A and Optex Systems Holdings, 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 .