Correlation Between Visa and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Visa and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on Visa and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Westport Fuel.
Diversification Opportunities for Visa and Westport Fuel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Westport is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Visa i.e., Visa and Westport Fuel go up and down completely randomly.
Pair Corralation between Visa and Westport Fuel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Westport Fuel. However, Visa Class A is 2.98 times less risky than Westport Fuel. It trades about 0.07 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.01 per unit of risk. If you would invest 27,777 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 3,731 from holding Visa Class A or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Visa Class A vs. Westport Fuel Systems
Performance |
| Timeline |
| Visa Class A |
| Westport Fuel Systems |
Visa and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Westport Fuel
The main advantage of trading using opposite Visa and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Westport Fuel vs. Ballard Power Systems | Westport Fuel vs. NFI Group | Westport Fuel vs. GreenPower Motor | Westport Fuel vs. Real Matters |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |