Correlation Between Visa and Voya Large

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

Diversification Opportunities for Visa and Voya Large

0.89

Correlation Coefficient

Visa  Voya Large

Very poor diversification

The 3 months correlation between Visa and Voya is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap 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 Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Visa i.e., Visa and Voya Large go up and down completely randomly.

Pair Corralation between Visa and Voya Large

Taking into account the 90-day investment horizon Visa is expected to generate 3.05 times less return on investment than Voya Large. But when comparing it to its historical volatility, Visa Class A is 1.3 times less risky than Voya Large. It trades about 0.07 of its potential returns per unit of risk. Voya Large Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,808  in Voya Large Cap on September 25, 2024 and sell it today you would earn a total of  78.00  from holding Voya Large Cap or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Voya Large Cap

Visa Class A

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) 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.

Voya Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Voya Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Voya Large

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

The idea behind Visa Class A and Voya Large Cap 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.