Correlation Between Visa and ITM Power
Can any of the company-specific risk be diversified away by investing in both Visa and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Visa and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ITM Power.
Diversification Opportunities for Visa and ITM Power
Pay attention - limited upside
The 3 months correlation between Visa and ITM is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Visa i.e., Visa and ITM Power go up and down completely randomly.
Pair Corralation between Visa and ITM Power
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.22 times more return on investment than ITM Power. However, Visa Class A is 4.61 times less risky than ITM Power. It trades about 0.35 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.12 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. ITM Power Plc
Performance |
| Timeline |
| Visa Class A |
| ITM Power Plc |
Visa and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ITM Power
The main advantage of trading using opposite Visa and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |