Correlation Between Visa and Kelt Exploration

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

Diversification Opportunities for Visa and Kelt Exploration

0.42

Correlation Coefficient

Visa  Kelt Exploration

Very weak diversification

The 3 months correlation between Visa and Kelt is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration 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 Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Visa i.e., Visa and Kelt Exploration go up and down completely randomly.

Pair Corralation between Visa and Kelt Exploration

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.59 times more return on investment than Kelt Exploration. However, Visa Class A is 1.71 times less risky than Kelt Exploration. It trades about 0.19 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.06 per unit of risk. If you would invest  26,867  in Visa Class A on August 28, 2024 and sell it today you would earn a total of  4,452  from holding Visa Class A or generate 16.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Visa Class A  vs.  Kelt Exploration

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Kelt Exploration

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kelt Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Kelt Exploration may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Visa and Kelt Exploration

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

The idea behind Visa Class A and Kelt Exploration 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.