Correlation Between Visa and KINDER

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Can any of the company-specific risk be diversified away by investing in both Visa and KINDER 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 KINDER 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 KINDER MORGAN INC, you can compare the effects of market volatilities on Visa and KINDER 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 KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KINDER.

Diversification Opportunities for Visa and KINDER

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Visa and KINDER is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Visa i.e., Visa and KINDER go up and down completely randomly.

Pair Corralation between Visa and KINDER

Taking into account the 90-day investment horizon Visa is expected to generate 24.7 times less return on investment than KINDER. But when comparing it to its historical volatility, Visa Class A is 52.5 times less risky than KINDER. It trades about 0.1 of its potential returns per unit of risk. KINDER MORGAN INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,055  in KINDER MORGAN INC on September 1, 2024 and sell it today you would earn a total of  455.00  from holding KINDER MORGAN INC or generate 5.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.12%
ValuesDaily Returns

Visa Class A  vs.  KINDER MORGAN INC

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
KINDER MORGAN INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Visa and KINDER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and KINDER

The main advantage of trading using opposite Visa and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER's long position.
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The idea behind Visa Class A and KINDER MORGAN INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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