Correlation Between Visa and Value Grupo

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

Diversification Opportunities for Visa and Value Grupo

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and Value is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Value Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Grupo Financiero 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 Value Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Grupo Financiero has no effect on the direction of Visa i.e., Visa and Value Grupo go up and down completely randomly.

Pair Corralation between Visa and Value Grupo

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.41 times more return on investment than Value Grupo. However, Visa Class A is 2.43 times less risky than Value Grupo. It trades about 0.28 of its potential returns per unit of risk. Value Grupo Financiero is currently generating about -0.13 per unit of risk. If you would invest  27,442  in Visa Class A on August 30, 2024 and sell it today you would earn a total of  4,028  from holding Visa Class A or generate 14.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.18%
ValuesDaily Returns

Visa Class A  vs.  Value Grupo Financiero

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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.
Value Grupo Financiero 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Value Grupo Financiero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Visa and Value Grupo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Value Grupo

The main advantage of trading using opposite Visa and Value Grupo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Value Grupo 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 Value Grupo will offset losses from the drop in Value Grupo's long position.
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The idea behind Visa Class A and Value Grupo Financiero 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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