Correlation Between Visa and Sn Hf

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

Diversification Opportunities for Visa and Sn Hf

-0.9

Correlation Coefficient

Visa  Sn Hf

Pay attention - limited upside

The 3 months correlation between Visa and SYN is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sn hf 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 Sn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sn hf has no effect on the direction of Visa i.e., Visa and Sn Hf go up and down completely randomly.

Pair Corralation between Visa and Sn Hf

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.21 times more return on investment than Sn Hf. However, Visa Class A is 4.84 times less risky than Sn Hf. It trades about 0.14 of its potential returns per unit of risk. Sn hf is currently generating about -0.28 per unit of risk. If you would invest  34,524  in Visa Class A on December 4, 2024 and sell it today you would earn a total of  952.00  from holding Visa Class A or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Sn hf

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) 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.

Sn hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sn hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Visa and Sn Hf

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

The idea behind Visa Class A and Sn hf 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.