Correlation Between Visa and Rothschild

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

Diversification Opportunities for Visa and Rothschild

-0.27

Correlation Coefficient

Visa  Rothschild

Very good diversification

The 3 months correlation between Visa and Rothschild is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rothschild Co SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rothschild Co SCA 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 Rothschild. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rothschild Co SCA has no effect on the direction of Visa i.e., Visa and Rothschild go up and down completely randomly.

Pair Corralation between Visa and Rothschild

If you would invest  3,992  in Rothschild Co SCA on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Rothschild Co SCA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Visa Class A  vs.  Rothschild Co SCA

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

Rothschild Co SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rothschild Co SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Rothschild is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Rothschild

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

The idea behind Visa Class A and Rothschild Co SCA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.