Correlation Between Visa and Applied Finance

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

Diversification Opportunities for Visa and Applied Finance

0.09

Correlation Coefficient

Visa  Applied Finance

Significant diversification

The 3 months correlation between Visa and Applied is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core 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 Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Visa i.e., Visa and Applied Finance go up and down completely randomly.

Pair Corralation between Visa and Applied Finance

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Applied Finance. In addition to that, Visa is 1.63 times more volatile than Applied Finance Core. It trades about -0.02 of its total potential returns per unit of risk. Applied Finance Core is currently generating about 0.15 per unit of volatility. If you would invest  1,089  in Applied Finance Core on May 4, 2025 and sell it today you would earn a total of  80.00  from holding Applied Finance Core or generate 7.35% return on investment over 90 days.

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

Visa Class A  vs.  Applied Finance Core

Visa Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Applied Finance Core

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Finance Core are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Applied Finance may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Visa and Applied Finance

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

The idea behind Visa Class A and Applied Finance Core 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.