Correlation Between Visa and Strategy Shares

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

Diversification Opportunities for Visa and Strategy Shares

VisaStrategyDiversified AwayVisaStrategyDiversified Away100%
0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Visa and Strategy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of Visa i.e., Visa and Strategy Shares go up and down completely randomly.

Pair Corralation between Visa and Strategy Shares

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.12 times more return on investment than Strategy Shares. However, Visa is 1.12 times more volatile than Strategy Shares NewfoundReSolve. It trades about 0.27 of its potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about -0.05 per unit of risk. If you would invest  31,248  in Visa Class A on December 3, 2024 and sell it today you would earn a total of  5,023  from holding Visa Class A or generate 16.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  Strategy Shares NewfoundReSolv

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015
JavaScript chart by amCharts 3.21.15V ROMO
       Timeline  
Visa Class A 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15JanFebFebMar310320330340350360
Strategy Shares Newf 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Strategy Shares NewfoundReSolve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar31.53232.533

Visa and Strategy Shares Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.73-2.04-1.36-0.67-0.01140.751.532.323.13.88 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15V ROMO
       Returns  

Pair Trading with Visa and Strategy Shares

The main advantage of trading using opposite Visa and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' long position.
The idea behind Visa Class A and Strategy Shares NewfoundReSolve 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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