Correlation Between Visa and RF Industries

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

Diversification Opportunities for Visa and RF Industries

0.54

Correlation Coefficient

Visa  RF Industries

Very weak diversification

The 3 months correlation between Visa and RFIL is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries 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 RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Visa i.e., Visa and RF Industries go up and down completely randomly.

Pair Corralation between Visa and RF Industries

Taking into account the 90-day investment horizon Visa is expected to generate 3.72 times less return on investment than RF Industries. But when comparing it to its historical volatility, Visa Class A is 3.97 times less risky than RF Industries. It trades about 0.12 of its potential returns per unit of risk. RF Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  388.00  in RF Industries on December 26, 2024 and sell it today you would earn a total of  100.00  from holding RF Industries or generate 25.77% return on investment over 90 days.

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

Visa Class A  vs.  RF Industries

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.

RF Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RF Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, RF Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and RF Industries

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

The idea behind Visa Class A and RF Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.