Correlation Between Visa and XSpring Capital

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

Diversification Opportunities for Visa and XSpring Capital

-0.24

Correlation Coefficient

Visa  XSpring Capital

Very good diversification

The 3 months correlation between Visa and XSpring is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital Public 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 XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of Visa i.e., Visa and XSpring Capital go up and down completely randomly.

Pair Corralation between Visa and XSpring Capital

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than XSpring Capital. However, Visa Class A is 2.0 times less risky than XSpring Capital. It trades about 0.17 of its potential returns per unit of risk. XSpring Capital Public is currently generating about -0.08 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 Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Visa Class A  vs.  XSpring Capital Public

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.

XSpring Capital Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days XSpring Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Visa and XSpring Capital

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

The idea behind Visa Class A and XSpring Capital Public 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.