Correlation Between Carlyle and Visa

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

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

Diversification Opportunities for Carlyle and Visa

0.8

Correlation Coefficient

Carlyle  Visa

Very poor diversification

The 3 months correlation between Carlyle and Visa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle 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 Carlyle 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 Carlyle 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 Carlyle i.e., Carlyle and Visa go up and down completely randomly.

Pair Corralation between Carlyle and Visa

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the Visa. In addition to that, Carlyle is 2.06 times more volatile than Visa Class A. It trades about -0.06 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.1 per unit of volatility. If you would invest  31,470  in Visa Class A on September 28, 2024 and sell it today you would earn a total of  595.00  from holding Visa Class A or generate 1.89% return on investment over 90 days.

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

Carlyle Group  vs.  Visa Class A

Carlyle Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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 Carlyle and Visa

The main advantage of trading using opposite Carlyle and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.