Correlation Between Visa and 05565QDH8

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Can any of the company-specific risk be diversified away by investing in both Visa and 05565QDH8 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 05565QDH8 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 BP CAP MKTS, you can compare the effects of market volatilities on Visa and 05565QDH8 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 05565QDH8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and 05565QDH8.

Diversification Opportunities for Visa and 05565QDH8

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Visa and 05565QDH8 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BP CAP MKTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP CAP MKTS 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 05565QDH8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP CAP MKTS has no effect on the direction of Visa i.e., Visa and 05565QDH8 go up and down completely randomly.

Pair Corralation between Visa and 05565QDH8

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.18 times more return on investment than 05565QDH8. However, Visa is 1.18 times more volatile than BP CAP MKTS. It trades about 0.33 of its potential returns per unit of risk. BP CAP MKTS is currently generating about -0.25 per unit of risk. If you would invest  28,960  in Visa Class A on August 31, 2024 and sell it today you would earn a total of  2,510  from holding Visa Class A or generate 8.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  BP CAP MKTS

 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.
BP CAP MKTS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BP CAP MKTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BP CAP MKTS investors.

Visa and 05565QDH8 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and 05565QDH8

The main advantage of trading using opposite Visa and 05565QDH8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, 05565QDH8 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 05565QDH8 will offset losses from the drop in 05565QDH8's long position.
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The idea behind Visa Class A and BP CAP MKTS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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