Correlation Between Visa and CbdMD

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

Diversification Opportunities for Visa and CbdMD

0.77

Correlation Coefficient

Visa  CbdMD

Poor diversification

The 3 months correlation between Visa and CbdMD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc 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 CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Visa i.e., Visa and CbdMD go up and down completely randomly.

Pair Corralation between Visa and CbdMD

Taking into account the 90-day investment horizon Visa is expected to generate 6.74 times less return on investment than CbdMD. But when comparing it to its historical volatility, Visa Class A is 9.51 times less risky than CbdMD. It trades about 0.28 of its potential returns per unit of risk. cbdMD Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  70.00  in cbdMD Inc on November 20, 2024 and sell it today you would earn a total of  78.00  from holding cbdMD Inc or generate 111.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.92%
Values	Daily Returns

Visa Class A  vs.  cbdMD Inc

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 21 (%) 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.

cbdMD Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CbdMD sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and CbdMD

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

The idea behind Visa Class A and cbdMD Inc 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..