Correlation Between Visa and Energy
Can any of the company-specific risk be diversified away by investing in both Visa and 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 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 Energy and Water, you can compare the effects of market volatilities on Visa and 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Energy.
Diversification Opportunities for Visa and Energy
Excellent diversification
The 3 months correlation between Visa and Energy is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of Visa i.e., Visa and Energy go up and down completely randomly.
Pair Corralation between Visa and Energy
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.07 times more return on investment than Energy. However, Visa Class A is 13.53 times less risky than Energy. It trades about 0.28 of its potential returns per unit of risk. Energy and Water is currently generating about -0.19 per unit of risk. If you would invest 27,442 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 4,028 from holding Visa Class A or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Visa Class A vs. Energy and Water
Performance |
| Timeline |
| Visa Class A |
| Energy and Water |
Visa and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Energy
The main advantage of trading using opposite Visa and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, 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 Energy will offset losses from the drop in Energy's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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