Correlation Between Visa and PLNUSD

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

Diversification Opportunities for Visa and PLNUSD

0.0

Correlation Coefficient

Visa  PLNUSD

Pay attention - limited upside

The 3 months correlation between Visa and PLNUSD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PLNUSD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLNUSD 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 PLNUSD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLNUSD has no effect on the direction of Visa i.e., Visa and PLNUSD go up and down completely randomly.

Pair Corralation between Visa and PLNUSD

If you would invest  30,926  in Visa Class A on December 18, 2024 and sell it today you would earn a total of  2,529  from holding Visa Class A or generate 8.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  PLNUSD

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) 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.

PLNUSD

Risk-Adjusted Performance

Very Weak

Over the last 90 days PLNUSD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, PLNUSD is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and PLNUSD

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

The idea behind Visa Class A and PLNUSD 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.