Correlation Between Visa and Star Royalties

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

Diversification Opportunities for Visa and Star Royalties

-0.44

Correlation Coefficient

Visa  Star Royalties

Very good diversification

The 3 months correlation between Visa and Star is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Star Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Royalties 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 Star Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Royalties has no effect on the direction of Visa i.e., Visa and Star Royalties go up and down completely randomly.

Pair Corralation between Visa and Star Royalties

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Star Royalties. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 3.64 times less risky than Star Royalties. The stock trades about -0.02 of its potential returns per unit of risk. The Star Royalties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Star Royalties on May 6, 2025 and sell it today you would earn a total of  1.00  from holding Star Royalties or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Visa Class A  vs.  Star Royalties

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.

Star Royalties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Star Royalties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Star Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Star Royalties

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

The idea behind Visa Class A and Star Royalties 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.