Correlation Between Visa and CSX

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

Diversification Opportunities for Visa and CSX

-0.2

Correlation Coefficient

Visa  CSX

Good diversification

The 3 months correlation between Visa and CSX is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Visa i.e., Visa and CSX go up and down completely randomly.

Pair Corralation between Visa and CSX

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the CSX. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.4 times less risky than CSX. The stock trades about -0.07 of its potential returns per unit of risk. The CSX Corporation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,250  in CSX Corporation on June 30, 2025 and sell it today you would earn a total of  151.00  from holding CSX Corporation or generate 4.65% return on investment over 90 days.

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

Visa Class A  vs.  CSX Corp.

Visa Class A

Risk-Adjusted Performance

Weakest

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.

CSX Corporation

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, CSX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and CSX

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

The idea behind Visa Class A and CSX Corporation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.