Correlation Between Visa and Verisk Analytics

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Can any of the company-specific risk be diversified away by investing in both Visa and Verisk Analytics 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 Verisk Analytics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc and Verisk Analytics, you can compare the effects of market volatilities on Visa and Verisk Analytics 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 Verisk Analytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Verisk Analytics.

Diversification Opportunities for Visa and Verisk Analytics

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Visa and Verisk is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Inc are associated (or correlated) with Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Visa i.e., Visa and Verisk Analytics go up and down completely randomly.

Pair Corralation between Visa and Verisk Analytics

Taking into account the 90-day investment horizon Visa is expected to generate 1.24 times less return on investment than Verisk Analytics. In addition to that, Visa is 1.15 times more volatile than Verisk Analytics. It trades about 0.01 of its total potential returns per unit of risk. Verisk Analytics is currently generating about 0.02 per unit of volatility. If you would invest  18,354  in Verisk Analytics on May 12, 2022 and sell it today you would earn a total of  1,861  from holding Verisk Analytics or generate 10.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Visa Inc  vs.  Verisk Analytics

 Performance (%) 
       Timeline  
Visa Inc 
Visa Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Visa Price Channel

Verisk Analytics 
Verisk Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Verisk Analytics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Verisk Price Channel

Visa and Verisk Analytics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Verisk Analytics

The main advantage of trading using opposite Visa and Verisk Analytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Verisk Analytics 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 Verisk Analytics will offset losses from the drop in Verisk Analytics' long position.
The idea behind Visa Inc and Verisk Analytics 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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