Correlation Between Visa and Global Ship

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Can any of the company-specific risk be diversified away by investing in both Visa and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc and Global Ship Lease, you can compare the effects of market volatilities on Visa and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Global Ship.

Diversification Opportunities for Visa and Global Ship

VisaGlobalDiversified AwayVisaGlobalDiversified Away100%
-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and Global is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Inc are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Visa i.e., Visa and Global Ship go up and down completely randomly.

Pair Corralation between Visa and Global Ship

Assuming the 90 days trading horizon Visa Inc is expected to generate 0.48 times more return on investment than Global Ship. However, Visa Inc is 2.07 times less risky than Global Ship. It trades about 0.32 of its potential returns per unit of risk. Global Ship Lease is currently generating about -0.01 per unit of risk. If you would invest  29,330  in Visa Inc on November 20, 2024 and sell it today you would earn a total of  4,750  from holding Visa Inc or generate 16.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Visa Inc  vs.  Global Ship Lease

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.153V64 37H
       Timeline  
Visa Inc 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb290300310320330340
Global Ship Lease 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2020.52121.522

Visa and Global Ship Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.23-1.65-1.07-0.490.06560.71.331.972.63.24 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.153V64 37H
       Returns  

Pair Trading with Visa and Global Ship

The main advantage of trading using opposite Visa and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.
The idea behind Visa Inc and Global Ship Lease 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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