Correlation Between Visa and God Bless

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

Diversification Opportunities for Visa and God Bless

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Visa and God is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and God Bless America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on God Bless America 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 God Bless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of God Bless America has no effect on the direction of Visa i.e., Visa and God Bless go up and down completely randomly.

Pair Corralation between Visa and God Bless

Taking into account the 90-day investment horizon Visa is expected to generate 1.5 times less return on investment than God Bless. In addition to that, Visa is 1.24 times more volatile than God Bless America. It trades about 0.08 of its total potential returns per unit of risk. God Bless America is currently generating about 0.14 per unit of volatility. If you would invest  3,390  in God Bless America on September 5, 2024 and sell it today you would earn a total of  641.00  from holding God Bless America or generate 18.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  God Bless America

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.
God Bless America 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in God Bless America are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, God Bless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Visa and God Bless Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and God Bless

The main advantage of trading using opposite Visa and God Bless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, God Bless 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 God Bless will offset losses from the drop in God Bless' long position.
The idea behind Visa Class A and God Bless America 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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