Correlation Between Visa and Grupo Empresarial

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

Diversification Opportunities for Visa and Grupo Empresarial

-0.23

Correlation Coefficient

Visa  Grupo Empresarial

Very good diversification

The 3 months correlation between Visa and Grupo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Grupo Empresarial San in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Empresarial San 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 Grupo Empresarial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Empresarial San has no effect on the direction of Visa i.e., Visa and Grupo Empresarial go up and down completely randomly.

Pair Corralation between Visa and Grupo Empresarial

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Grupo Empresarial. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.87 times less risky than Grupo Empresarial. The stock trades about -0.03 of its potential returns per unit of risk. The Grupo Empresarial San is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Grupo Empresarial San on March 8, 2024 and sell it today you would earn a total of  67.00  from holding Grupo Empresarial San or generate 17.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Visa Class A  vs.  Grupo Empresarial San

Visa Class A

Risk-Adjusted Performance

0 of 100

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grupo Empresarial San

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Empresarial San are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking indicators, Grupo Empresarial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Grupo Empresarial

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

The idea behind Visa Class A and Grupo Empresarial San 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.