Correlation Between Visa and QUALCOMM Incorporated

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

Diversification Opportunities for Visa and QUALCOMM Incorporated

-0.63

Correlation Coefficient

Visa  QUALCOMM Incorporated

Excellent diversification

The 3 months correlation between Visa and QUALCOMM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and QUALCOMM Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM Incorporated 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 QUALCOMM Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM Incorporated has no effect on the direction of Visa i.e., Visa and QUALCOMM Incorporated go up and down completely randomly.

Pair Corralation between Visa and QUALCOMM Incorporated

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.63 times more return on investment than QUALCOMM Incorporated. However, Visa Class A is 1.58 times less risky than QUALCOMM Incorporated. It trades about 0.12 of its potential returns per unit of risk. QUALCOMM Incorporated is currently generating about -0.07 per unit of risk. If you would invest  28,680  in Visa Class A on September 13, 2024 and sell it today you would earn a total of  2,743  from holding Visa Class A or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Visa Class A  vs.  QUALCOMM Incorporated

Visa Class A

Risk-Adjusted Performance

9 of 100

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 January 2025.

QUALCOMM Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QUALCOMM Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Visa and QUALCOMM Incorporated

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

The idea behind Visa Class A and QUALCOMM Incorporated 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.