Correlation Between Visa and Pax Esg

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

Diversification Opportunities for Visa and Pax Esg

-0.26

Correlation Coefficient

Visa  Pax Esg

Very good diversification

The 3 months correlation between Visa and Pax is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Pax Esg Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Esg Beta 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 Pax Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Esg Beta has no effect on the direction of Visa i.e., Visa and Pax Esg go up and down completely randomly.

Pair Corralation between Visa and Pax Esg

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.38 times more return on investment than Pax Esg. However, Visa Class A is 2.64 times less risky than Pax Esg. It trades about 0.08 of its potential returns per unit of risk. Pax Esg Beta is currently generating about -0.3 per unit of risk. If you would invest  30,830  in Visa Class A on October 10, 2024 and sell it today you would earn a total of  430.00  from holding Visa Class A or generate 1.39% return on investment over 90 days.

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

Visa Class A  vs.  Pax Esg Beta

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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 February 2025.

Pax Esg Beta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pax Esg Beta has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Visa and Pax Esg

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

The idea behind Visa Class A and Pax Esg Beta 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.