Correlation Between Focus Impact and Visa

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

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

Diversification Opportunities for Focus Impact and Visa

-0.12

Correlation Coefficient

Focus Impact  Visa

Good diversification

The 3 months correlation between Focus and Visa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Focus Impact Acquisition 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 Focus Impact 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 Focus Impact Acquisition 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 Focus Impact i.e., Focus Impact and Visa go up and down completely randomly.

Pair Corralation between Focus Impact and Visa

Given the investment horizon of 90 days Focus Impact Acquisition is expected to generate 2.96 times more return on investment than Visa. However, Focus Impact is 2.96 times more volatile than Visa Class A. It trades about 0.05 of its potential returns per unit of risk. Visa Class A is currently generating about 0.0 per unit of risk. If you would invest  1,119  in Focus Impact Acquisition on July 4, 2024 and sell it today you would earn a total of  34.00  from holding Focus Impact Acquisition or generate 3.04% return on investment over 90 days.

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

Focus Impact Acquisition  vs.  Visa Class A

Focus Impact Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Impact Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Focus Impact is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Visa Class A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Focus Impact and Visa

The main advantage of trading using opposite Focus Impact and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Impact 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 Focus Impact Acquisition 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.