Correlation Between Gentera SAB and Visa

Can any of the company-specific risk be diversified away by investing in both Gentera SAB and Visa 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 Gentera SAB and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gentera SAB de and Visa Inc, you can compare the effects of market volatilities on Gentera SAB and Visa 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 Gentera SAB with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentera SAB and Visa.

Diversification Opportunities for Gentera SAB and Visa

0.39

Correlation Coefficient

Gentera SAB  Visa

Weak diversification

The 3 months correlation between Gentera and Visa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gentera SAB de and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Gentera SAB 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 Gentera SAB de are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Gentera SAB i.e., Gentera SAB and Visa go up and down completely randomly.

Pair Corralation between Gentera SAB and Visa

Assuming the 90 days trading horizon Gentera SAB de is expected to under-perform the Visa. In addition to that, Gentera SAB is 2.4 times more volatile than Visa Inc. It trades about -0.22 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.07 per unit of volatility. If you would invest  631,100  in Visa Inc on October 12, 2024 and sell it today you would earn a total of  7,300  from holding Visa Inc or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Gentera SAB de  vs.  Visa Inc

Gentera SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

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

Visa Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentera SAB and Visa

The main advantage of trading using opposite Gentera SAB and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentera SAB position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.

The idea behind Gentera SAB de and Visa 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.