Correlation Between Visa and Outfront Media

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

Diversification Opportunities for Visa and Outfront Media

0.38

Correlation Coefficient

Visa  Outfront Media

Weak diversification

The 3 months correlation between Visa and Outfront is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Outfront Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outfront Media 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 Outfront Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outfront Media has no effect on the direction of Visa i.e., Visa and Outfront Media go up and down completely randomly.

Pair Corralation between Visa and Outfront Media

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Outfront Media. However, Visa Class A is 2.01 times less risky than Outfront Media. It trades about 0.02 of its potential returns per unit of risk. Outfront Media is currently generating about -0.3 per unit of risk. If you would invest  27,803  in Visa Class A on March 10, 2024 and sell it today you would earn a total of  64.00  from holding Visa Class A or generate 0.23% 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.  Outfront Media

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.

Outfront Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Outfront Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and Outfront Media

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

The idea behind Visa Class A and Outfront Media 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.