Correlation Between Visa and Nippon Mutual

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

Diversification Opportunities for Visa and Nippon Mutual

-0.66

Correlation Coefficient

Visa  Nippon Mutual

Excellent diversification

The 3 months correlation between Visa and Nippon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nippon Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Mutual Funds 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 Nippon Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Mutual Funds has no effect on the direction of Visa i.e., Visa and Nippon Mutual go up and down completely randomly.

Pair Corralation between Visa and Nippon Mutual

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.62 times more return on investment than Nippon Mutual. However, Visa Class A is 1.62 times less risky than Nippon Mutual. It trades about 0.12 of its potential returns per unit of risk. Nippon Mutual Funds is currently generating about -0.09 per unit of risk. If you would invest  31,669  in Visa Class A on December 21, 2024 and sell it today you would earn a total of  2,281  from holding Visa Class A or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Visa Class A  vs.  Nippon Mutual Funds

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.

Nippon Mutual Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nippon Mutual Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Visa and Nippon Mutual

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

The idea behind Visa Class A and Nippon Mutual Funds 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.