Correlation Between Visa and ICF International

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

Diversification Opportunities for Visa and ICF International

0.51

Correlation Coefficient

Visa  ICF International

Very weak diversification

The 3 months correlation between Visa and ICF is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International 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 ICF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICF International has no effect on the direction of Visa i.e., Visa and ICF International go up and down completely randomly.

Pair Corralation between Visa and ICF International

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.69 times more return on investment than ICF International. However, Visa Class A is 1.45 times less risky than ICF International. It trades about 0.34 of its potential returns per unit of risk. ICF International is currently generating about 0.13 per unit of risk. If you would invest  26,821  in Visa Class A on June 25, 2024 and sell it today you would earn a total of  1,656  from holding Visa Class A or generate 6.17% return on investment over 90 days.

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

Visa Class A  vs.  ICF International

Visa Class A

Risk-Adjusted Performance

4 of 100

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.

ICF International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICF International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, ICF International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and ICF International

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

The idea behind Visa Class A and ICF International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.