Correlation Between Visa and Xp Properties

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

Diversification Opportunities for Visa and Xp Properties

-0.74

Correlation Coefficient

Visa  Xp Properties

Pay attention - limited upside

The 3 months correlation between Visa and XPPR11 is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Xp Properties Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Properties Fundo 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 Xp Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Properties Fundo has no effect on the direction of Visa i.e., Visa and Xp Properties go up and down completely randomly.

Pair Corralation between Visa and Xp Properties

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.11 times more return on investment than Xp Properties. However, Visa is 1.11 times more volatile than Xp Properties Fundo. It trades about 0.1 of its potential returns per unit of risk. Xp Properties Fundo is currently generating about -0.15 per unit of risk. If you would invest  27,011  in Visa Class A on September 15, 2024 and sell it today you would earn a total of  4,463  from holding Visa Class A or generate 16.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Visa Class A  vs.  Xp Properties Fundo

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xp Properties Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Properties Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Visa and Xp Properties

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

The idea behind Visa Class A and Xp Properties Fundo 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.