Correlation Between Visa and SmartCentres Real

Can any of the company-specific risk be diversified away by investing in both Visa and SmartCentres Real 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 SmartCentres Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visa Inc CDR and SmartCentres Real Estate, you can compare the effects of market volatilities on Visa and SmartCentres Real 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 SmartCentres Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SmartCentres Real.

Diversification Opportunities for Visa and SmartCentres Real

-0.47

Correlation Coefficient

Visa  SmartCentres Real

Very good diversification

The 3 months correlation between Visa and SmartCentres is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc CDR and SmartCentres Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCentres Real Estate 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 Inc CDR are associated (or correlated) with SmartCentres Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCentres Real Estate has no effect on the direction of Visa i.e., Visa and SmartCentres Real go up and down completely randomly.

Pair Corralation between Visa and SmartCentres Real

Assuming the 90 days trading horizon Visa Inc CDR is expected to generate 1.44 times more return on investment than SmartCentres Real. However, Visa is 1.44 times more volatile than SmartCentres Real Estate. It trades about 0.16 of its potential returns per unit of risk. SmartCentres Real Estate is currently generating about 0.01 per unit of risk. If you would invest  2,651  in Visa Inc CDR on September 2, 2024 and sell it today you would earn a total of  360.00  from holding Visa Inc CDR or generate 13.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Inc CDR  vs.  SmartCentres Real Estate

Visa Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

SmartCentres Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartCentres Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SmartCentres Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and SmartCentres Real

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

The idea behind Visa Inc CDR and SmartCentres Real Estate 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.