Correlation Between Visa and World Energy
Can any of the company-specific risk be diversified away by investing in both Visa and World Energy 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 World Energy 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 World Energy Fund, you can compare the effects of market volatilities on Visa and World Energy 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 World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and World Energy.
Diversification Opportunities for Visa and World Energy
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and World is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy 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 World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Visa i.e., Visa and World Energy go up and down completely randomly.
Pair Corralation between Visa and World Energy
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.82 times more return on investment than World Energy. However, Visa Class A is 1.23 times less risky than World Energy. It trades about -0.12 of its potential returns per unit of risk. World Energy Fund is currently generating about -0.19 per unit of risk. If you would invest 34,457 in Visa Class A on January 5, 2025 and sell it today you would lose (3,144) from holding Visa Class A or give up 9.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Visa Class A vs. World Energy Fund
Performance |
| Timeline |
| Visa Class A |
| World Energy |
Visa and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and World Energy
The main advantage of trading using opposite Visa and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| World Energy vs. Bond Fund Investor | World Energy vs. Strategic Enhanced Yield | World Energy vs. Cavanal Hill Hedged | World Energy vs. Limited Duration Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges |