Correlation Between Visa and Pnc International

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

Diversification Opportunities for Visa and Pnc International

-0.54

Correlation Coefficient

Visa  Pnc International

Excellent diversification

The 3 months correlation between Visa and Pnc is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Pnc International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc International Growth 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 Pnc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc International Growth has no effect on the direction of Visa i.e., Visa and Pnc International go up and down completely randomly.

Pair Corralation between Visa and Pnc International

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.1 times more return on investment than Pnc International. However, Visa is 1.1 times more volatile than Pnc International Growth. It trades about 0.07 of its potential returns per unit of risk. Pnc International Growth is currently generating about -0.27 per unit of risk. If you would invest  31,319  in Visa Class A on September 24, 2024 and sell it today you would earn a total of  403.00  from holding Visa Class A or generate 1.29% return on investment over 90 days.

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

Visa Class A  vs.  Pnc International Growth

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Pnc International Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pnc International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pnc International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Pnc International

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

The idea behind Visa Class A and Pnc International Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.