Correlation Between Visa and Small Pany

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

Diversification Opportunities for Visa and Small Pany

-0.15

Correlation Coefficient

Visa  Small Pany

Good diversification

The 3 months correlation between Visa and Small is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund 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 Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Visa i.e., Visa and Small Pany go up and down completely randomly.

Pair Corralation between Visa and Small Pany

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Small Pany. In addition to that, Visa is 1.25 times more volatile than Small Pany Fund. It trades about -0.02 of its total potential returns per unit of risk. Small Pany Fund is currently generating about 0.12 per unit of volatility. If you would invest  1,511  in Small Pany Fund on May 4, 2025 and sell it today you would earn a total of  114.00  from holding Small Pany Fund or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Visa Class A  vs.  Small Pany Fund

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.

Small Pany Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Pany may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Visa and Small Pany

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

The idea behind Visa Class A and Small Pany Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.