Correlation Between Visa and Expat Slovakia

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

Diversification Opportunities for Visa and Expat Slovakia

-0.4

Correlation Coefficient

Visa  Expat Slovakia

Very good diversification

The 3 months correlation between Visa and Expat is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Expat Slovakia Sax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Slovakia Sax 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 Expat Slovakia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Slovakia Sax has no effect on the direction of Visa i.e., Visa and Expat Slovakia go up and down completely randomly.

Pair Corralation between Visa and Expat Slovakia

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.26 times more return on investment than Expat Slovakia. However, Visa is 1.26 times more volatile than Expat Slovakia Sax. It trades about 0.12 of its potential returns per unit of risk. Expat Slovakia Sax is currently generating about -0.04 per unit of risk. If you would invest  26,440  in Visa Class A on October 7, 2024 and sell it today you would earn a total of  5,051  from holding Visa Class A or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Visa Class A  vs.  Expat Slovakia Sax

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Expat Slovakia Sax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expat Slovakia Sax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Expat Slovakia is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and Expat Slovakia

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

The idea behind Visa Class A and Expat Slovakia Sax 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 Anywhere module to track or share privately all of your investments from the convenience of any device.