Correlation Between Visa and CompoSecure

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

Diversification Opportunities for Visa and CompoSecure

0.15

Correlation Coefficient

Visa  CompoSecure

Average diversification

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

Pair Corralation between Visa and CompoSecure

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the CompoSecure. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 2.49 times less risky than CompoSecure. The stock trades about 0.0 of its potential returns per unit of risk. The CompoSecure is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  396.00  in CompoSecure on May 3, 2025 and sell it today you would earn a total of  240.00  from holding CompoSecure or generate 60.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Visa Class A  vs.  CompoSecure

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.

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and CompoSecure

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

The idea behind Visa Class A and CompoSecure 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..