Correlation Between Visa and Balanced Fund

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

Diversification Opportunities for Visa and Balanced Fund

0.0

Correlation Coefficient

Visa  Balanced Fund

Pay attention - limited upside

The 3 months correlation between Visa and Balanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Balanced Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Class 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Class has no effect on the direction of Visa i.e., Visa and Balanced Fund go up and down completely randomly.

Pair Corralation between Visa and Balanced Fund

If you would invest  22,085  in Visa Class A on October 11, 2024 and sell it today you would earn a total of  9,175  from holding Visa Class A or generate 41.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Balanced Fund Class

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.

Balanced Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Balanced Fund

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

The idea behind Visa Class A and Balanced Fund Class 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.