Correlation Between Visa and Rede DOr

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

Diversification Opportunities for Visa and Rede DOr

0.6

Correlation Coefficient

Visa  Rede DOr

Poor diversification

The 3 months correlation between Visa and Rede is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rede DOr So in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rede DOr So 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 Rede DOr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rede DOr So has no effect on the direction of Visa i.e., Visa and Rede DOr go up and down completely randomly.

Pair Corralation between Visa and Rede DOr

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Rede DOr. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.23 times less risky than Rede DOr. The stock trades about -0.02 of its potential returns per unit of risk. The Rede DOr So is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,175  in Rede DOr So on May 5, 2025 and sell it today you would earn a total of  65.00  from holding Rede DOr So or generate 2.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Visa Class A  vs.  Rede DOr So

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.

Rede DOr So

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rede DOr So are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Rede DOr is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Rede DOr

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

The idea behind Visa Class A and Rede DOr So 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.