Correlation Between Visa and Universal Logistics

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

Diversification Opportunities for Visa and Universal Logistics

0.24

Correlation Coefficient

Visa  Universal Logistics

Modest diversification

The 3 months correlation between Visa and Universal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Universal Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Logistics 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 Universal Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Logistics has no effect on the direction of Visa i.e., Visa and Universal Logistics go up and down completely randomly.

Pair Corralation between Visa and Universal Logistics

Taking into account the 90-day investment horizon Visa is expected to generate 2.77 times less return on investment than Universal Logistics. But when comparing it to its historical volatility, Visa Class A is 2.1 times less risky than Universal Logistics. It trades about 0.05 of its potential returns per unit of risk. Universal Logistics Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,083  in Universal Logistics Holdings on June 24, 2024 and sell it today you would earn a total of  348.00  from holding Universal Logistics Holdings or generate 8.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Universal Logistics Holdings

Visa Class A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Universal Logistics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Logistics Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Universal Logistics may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Visa and Universal Logistics

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

The idea behind Visa Class A and Universal Logistics Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.