Correlation Between Visa and IQ Merger

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

Diversification Opportunities for Visa and IQ Merger

-0.31

Correlation Coefficient

Visa  IQ Merger

Very good diversification

The 3 months correlation between Visa and MNA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage 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 IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of Visa i.e., Visa and IQ Merger go up and down completely randomly.

Pair Corralation between Visa and IQ Merger

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the IQ Merger. In addition to that, Visa is 5.37 times more volatile than IQ Merger Arbitrage. It trades about -0.02 of its total potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.12 per unit of volatility. If you would invest  3,474  in IQ Merger Arbitrage on May 6, 2025 and sell it today you would earn a total of  66.00  from holding IQ Merger Arbitrage or generate 1.9% 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.  IQ Merger Arbitrage

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.

IQ Merger Arbitrage

Risk-Adjusted Performance

OK

Over the last 90 days IQ Merger Arbitrage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IQ Merger 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 IQ Merger

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

The idea behind Visa Class A and IQ Merger Arbitrage 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.