Correlation Between Visa and Engie SA
Can any of the company-specific risk be diversified away by investing in both Visa and Engie SA 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 Engie SA 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 Engie SA, you can compare the effects of market volatilities on Visa and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Engie SA.
Diversification Opportunities for Visa and Engie SA
Excellent diversification
The 3 months correlation between Visa and Engie is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Visa i.e., Visa and Engie SA go up and down completely randomly.
Pair Corralation between Visa and Engie SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.83 times more return on investment than Engie SA. However, Visa Class A is 1.2 times less risky than Engie SA. It trades about 0.09 of its potential returns per unit of risk. Engie SA is currently generating about 0.04 per unit of risk. If you would invest 20,975 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 10,533 from holding Visa Class A or generate 50.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Visa Class A vs. Engie SA
Performance |
| Timeline |
| Visa Class A |
| Engie SA |
Visa and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Engie SA
The main advantage of trading using opposite Visa and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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