Correlation Between Associated Capital and Visa

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Visa 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 Associated Capital and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Visa Class A, you can compare the effects of market volatilities on Associated Capital and Visa 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 Associated Capital with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Visa.

Diversification Opportunities for Associated Capital and Visa

0.55

Correlation Coefficient

Associated Capital  Visa

Very weak diversification

The 3 months correlation between Associated and Visa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Associated Capital 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 Associated Capital Group are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Associated Capital i.e., Associated Capital and Visa go up and down completely randomly.

Pair Corralation between Associated Capital and Visa

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 18.77 times less return on investment than Visa. In addition to that, Associated Capital is 1.68 times more volatile than Visa Class A. It trades about 0.0 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.07 per unit of volatility. If you would invest  22,059  in Visa Class A on August 4, 2024 and sell it today you would earn a total of  7,015  from holding Visa Class A or generate 31.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Associated Capital Group  vs.  Visa Class A

Associated Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Visa Class A

Risk-Adjusted Performance

13 of 100

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.

Pair Trading with Associated Capital and Visa

The main advantage of trading using opposite Associated Capital and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.

The idea behind Associated Capital Group and Visa Class A 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.