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 FNDTN HOSPS, 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

-0.17

Correlation Coefficient

Visa  KAISER

Good diversification

The 3 months correlation between Visa and KAISER is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KAISER FNDTN HOSPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAISER FNDTN HOSPS 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 FNDTN HOSPS 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 1.97 times less return on investment than KAISER. But when comparing it to its historical volatility, Visa Class A is 2.08 times less risky than KAISER. It trades about 0.06 of its potential returns per unit of risk. KAISER FNDTN HOSPS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,173  in KAISER FNDTN HOSPS on October 25, 2024 and sell it today you would earn a total of  141.00  from holding KAISER FNDTN HOSPS or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Visa Class A  vs.  KAISER FNDTN HOSPS

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

KAISER FNDTN HOSPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KAISER FNDTN HOSPS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KAISER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 FNDTN HOSPS 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..