Correlation Between Visa and STCITY

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Can any of the company-specific risk be diversified away by investing in both Visa and STCITY 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 STCITY 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 STCITY 65 15 JAN 28, you can compare the effects of market volatilities on Visa and STCITY 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 STCITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and STCITY.

Diversification Opportunities for Visa and STCITY

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Visa and STCITY is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and STCITY 65 15 JAN 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STCITY 65 15 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 STCITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STCITY 65 15 has no effect on the direction of Visa i.e., Visa and STCITY go up and down completely randomly.

Pair Corralation between Visa and STCITY

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.38 times more return on investment than STCITY. However, Visa Class A is 2.64 times less risky than STCITY. It trades about 0.35 of its potential returns per unit of risk. STCITY 65 15 JAN 28 is currently generating about -0.33 per unit of risk. If you would invest  28,929  in Visa Class A on September 1, 2024 and sell it today you would earn a total of  2,579  from holding Visa Class A or generate 8.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy57.14%
ValuesDaily Returns

Visa Class A  vs.  STCITY 65 15 JAN 28

 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.
STCITY 65 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STCITY 65 15 JAN 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for STCITY 65 15 JAN 28 investors.

Visa and STCITY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and STCITY

The main advantage of trading using opposite Visa and STCITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, STCITY 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 STCITY will offset losses from the drop in STCITY's long position.
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The idea behind Visa Class A and STCITY 65 15 JAN 28 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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