Correlation Between Visa and Orca

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

Diversification Opportunities for Visa and Orca

-0.81

Correlation Coefficient

Visa  Orca

Pay attention - limited upside

The 3 months correlation between Visa and Orca is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Orca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca 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 Orca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca has no effect on the direction of Visa i.e., Visa and Orca go up and down completely randomly.

Pair Corralation between Visa and Orca

Taking into account the 90-day investment horizon Visa is expected to generate 1.04 times less return on investment than Orca. But when comparing it to its historical volatility, Visa Class A is 14.97 times less risky than Orca. It trades about 0.13 of its potential returns per unit of risk. Orca is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Orca on December 27, 2024 and sell it today you would lose (137.00) from holding Orca or give up 36.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Orca

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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 April 2025.

Orca

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orca has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, Orca may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Orca

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

The idea behind Visa Class A and Orca 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.