Correlation Between Visa and CommScope Holding

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

Diversification Opportunities for Visa and CommScope Holding

0.29

Correlation Coefficient

Visa  CommScope Holding

Modest diversification

The 3 months correlation between Visa and CommScope is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CommScope Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CommScope Holding 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 CommScope Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CommScope Holding has no effect on the direction of Visa i.e., Visa and CommScope Holding go up and down completely randomly.

Pair Corralation between Visa and CommScope Holding

Taking into account the 90-day investment horizon Visa is expected to generate 17.4 times less return on investment than CommScope Holding. But when comparing it to its historical volatility, Visa Class A is 3.85 times less risky than CommScope Holding. It trades about 0.06 of its potential returns per unit of risk. CommScope Holding Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  388.00  in CommScope Holding Co on April 29, 2025 and sell it today you would earn a total of  425.00  from holding CommScope Holding Co or generate 109.54% return on investment over 90 days.

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

Visa Class A  vs.  CommScope Holding Co

Visa Class A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 4 (%) 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.

CommScope Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CommScope Holding Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, CommScope Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and CommScope Holding

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

The idea behind Visa Class A and CommScope Holding Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.