Correlation Between Visa and Kaiser

Can any of the company-specific risk be diversified away by investing in both Visa and Kaiser 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 Kaiser 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 Kaiser Aluminum 4625, you can compare the effects of market volatilities on Visa and Kaiser 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 Kaiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Kaiser.

Diversification Opportunities for Visa and Kaiser

-0.5

Correlation Coefficient

Visa  Kaiser

Very good diversification

The 3 months correlation between Visa and Kaiser is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kaiser Aluminum 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 4625 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 Kaiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum 4625 has no effect on the direction of Visa i.e., Visa and Kaiser go up and down completely randomly.

Pair Corralation between Visa and Kaiser

Taking into account the 90-day investment horizon Visa is expected to generate 25.06 times less return on investment than Kaiser. But when comparing it to its historical volatility, Visa Class A is 46.49 times less risky than Kaiser. It trades about 0.08 of its potential returns per unit of risk. Kaiser Aluminum 4625 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,215  in Kaiser Aluminum 4625 on October 10, 2024 and sell it today you would lose (238.00) from holding Kaiser Aluminum 4625 or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.74%
Values	Daily Returns

Visa Class A  vs.  Kaiser Aluminum 4625

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.

Kaiser Aluminum 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaiser Aluminum 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Kaiser Aluminum 4625 investors.

Pair Trading with Visa and Kaiser

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

The idea behind Visa Class A and Kaiser Aluminum 4625 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.