Correlation Between Visa and Federated Fund

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

Diversification Opportunities for Visa and Federated Fund

-0.5

Correlation Coefficient

Visa  Federated Fund

Very good diversification

The 3 months correlation between Visa and Federated is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For 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 Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Visa i.e., Visa and Federated Fund go up and down completely randomly.

Pair Corralation between Visa and Federated Fund

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Federated Fund. In addition to that, Visa is 3.56 times more volatile than Federated Fund For. It trades about -0.02 of its total potential returns per unit of risk. Federated Fund For is currently generating about 0.07 per unit of volatility. If you would invest  612.00  in Federated Fund For on May 6, 2025 and sell it today you would earn a total of  10.00  from holding Federated Fund For or generate 1.63% return on investment over 90 days.

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

Visa Class A  vs.  Federated Fund For

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.

Federated Fund For

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Fund For are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Federated Fund

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

The idea behind Visa Class A and Federated Fund For 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.