Correlation Between Visa and Ninepoint Energy
Can any of the company-specific risk be diversified away by investing in both Visa and Ninepoint 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 Ninepoint 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 Ninepoint Energy Income, you can compare the effects of market volatilities on Visa and Ninepoint 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 Ninepoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ninepoint Energy.
Diversification Opportunities for Visa and Ninepoint Energy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Ninepoint is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ninepoint Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy Income 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 Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy Income has no effect on the direction of Visa i.e., Visa and Ninepoint Energy go up and down completely randomly.
Pair Corralation between Visa and Ninepoint Energy
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.54 times more return on investment than Ninepoint Energy. However, Visa Class A is 1.84 times less risky than Ninepoint Energy. It trades about 0.05 of its potential returns per unit of risk. Ninepoint Energy Income is currently generating about -0.14 per unit of risk. If you would invest 31,032 in Visa Class A on September 12, 2024 and sell it today you would earn a total of 206.00 from holding Visa Class A or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Ninepoint Energy Income
Performance |
| Timeline |
| Visa Class A |
| Ninepoint Energy Income |
Visa and Ninepoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ninepoint Energy
The main advantage of trading using opposite Visa and Ninepoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ninepoint 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 Ninepoint Energy will offset losses from the drop in Ninepoint Energy's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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