Correlation Between Visa and Fidelity Canada

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

Diversification Opportunities for Visa and Fidelity Canada

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Visa and Fidelity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada 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 Fidelity Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Visa i.e., Visa and Fidelity Canada go up and down completely randomly.

Pair Corralation between Visa and Fidelity Canada

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.2 times more return on investment than Fidelity Canada. However, Visa is 1.2 times more volatile than Fidelity Canada Fund. It trades about 0.08 of its potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.05 per unit of risk. If you would invest  23,011  in Visa Class A on August 31, 2024 and sell it today you would earn a total of  8,459  from holding Visa Class A or generate 36.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  Fidelity Canada Fund

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.
Fidelity Canada 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canada Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Canada is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Visa and Fidelity Canada Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Fidelity Canada

The main advantage of trading using opposite Visa and Fidelity Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Fidelity Canada 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 Fidelity Canada will offset losses from the drop in Fidelity Canada's long position.
The idea behind Visa Class A and Fidelity Canada Fund 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.
Check out your portfolio center.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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