Correlation Between Visa and 62954HAL2

Can any of the company-specific risk be diversified away by investing in both Visa and 62954HAL2 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 62954HAL2 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 NXPI 3125 15 FEB 42, you can compare the effects of market volatilities on Visa and 62954HAL2 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 62954HAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and 62954HAL2.

Diversification Opportunities for Visa and 62954HAL2

0.78

Correlation Coefficient

Visa  62954HAL2

Poor diversification

The 3 months correlation between Visa and 62954HAL2 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and NXPI 3125 15 FEB 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXPI 3125 15 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 62954HAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXPI 3125 15 has no effect on the direction of Visa i.e., Visa and 62954HAL2 go up and down completely randomly.

Pair Corralation between Visa and 62954HAL2

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.64 times more return on investment than 62954HAL2. However, Visa Class A is 1.55 times less risky than 62954HAL2. It trades about 0.17 of its potential returns per unit of risk. NXPI 3125 15 FEB 42 is currently generating about -0.1 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.67%
Values	Daily Returns

Visa Class A  vs.  NXPI 3125 15 FEB 42

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 April 2025.

NXPI 3125 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXPI 3125 15 FEB 42 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 NXPI 3125 15 FEB 42 investors.

Pair Trading with Visa and 62954HAL2

The main advantage of trading using opposite Visa and 62954HAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, 62954HAL2 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 62954HAL2 will offset losses from the drop in 62954HAL2's long position.

The idea behind Visa Class A and NXPI 3125 15 FEB 42 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.