Correlation Between Visa and Mitek Systems

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

Diversification Opportunities for Visa and Mitek Systems

0.54

Correlation Coefficient

Visa  Mitek Systems

Very weak diversification

The 3 months correlation between Visa and Mitek is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mitek Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitek Systems 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 Mitek Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitek Systems has no effect on the direction of Visa i.e., Visa and Mitek Systems go up and down completely randomly.

Pair Corralation between Visa and Mitek Systems

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Mitek Systems. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.63 times less risky than Mitek Systems. The stock trades about -0.02 of its potential returns per unit of risk. The Mitek Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  842.00  in Mitek Systems on May 5, 2025 and sell it today you would earn a total of  38.00  from holding Mitek Systems or generate 4.51% 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.  Mitek Systems

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.

Mitek Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitek Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Mitek Systems is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Mitek Systems

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

The idea behind Visa Class A and Mitek Systems 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.