Correlation Between Visa and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Visa and Ensign 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 Ensign 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 Ensign Energy Services, you can compare the effects of market volatilities on Visa and Ensign 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 Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ensign Energy.
Diversification Opportunities for Visa and Ensign Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Ensign is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services 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 Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of Visa i.e., Visa and Ensign Energy go up and down completely randomly.
Pair Corralation between Visa and Ensign Energy
Taking into account the 90-day investment horizon Visa is expected to generate 1.14 times less return on investment than Ensign Energy. But when comparing it to its historical volatility, Visa Class A is 2.97 times less risky than Ensign Energy. It trades about 0.09 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 185.00 in Ensign Energy Services on August 26, 2024 and sell it today you would earn a total of 38.00 from holding Ensign Energy Services or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Ensign Energy Services
Performance |
| Timeline |
| Visa Class A |
| Ensign Energy Services |
Visa and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ensign Energy
The main advantage of trading using opposite Visa and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ensign 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 Ensign Energy will offset losses from the drop in Ensign Energy's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Ensign Energy vs. Petroleo Brasileiro Petrobras | Ensign Energy vs. Equinor ASA ADR | Ensign Energy vs. Eni SpA ADR | Ensign Energy vs. YPF Sociedad Anonima |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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