Correlation Between Visa and Real Estate

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

Diversification Opportunities for Visa and Real Estate

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and Real is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of Visa i.e., Visa and Real Estate go up and down completely randomly.

Pair Corralation between Visa and Real Estate

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.24 times more return on investment than Real Estate. However, Visa is 1.24 times more volatile than Real Estate Securities. It trades about 0.19 of its potential returns per unit of risk. Real Estate Securities is currently generating about 0.02 per unit of risk. If you would invest  27,740  in Visa Class A on October 4, 2024 and sell it today you would earn a total of  3,864  from holding Visa Class A or generate 13.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy60.32%
ValuesDaily Returns

Visa Class A  vs.  Real Estate Securities

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan280290300310320
Real Estate Securities 

Risk-Adjusted Performance

0 of 100

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

Visa and Real Estate Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Real Estate

The main advantage of trading using opposite Visa and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.
The idea behind Visa Class A and Real Estate Securities 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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