Correlation Between Visa and Gentera SAB

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

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

Diversification Opportunities for Visa and Gentera SAB

0.77

Correlation Coefficient

Visa  Gentera SAB

Poor diversification

The 3 months correlation between Visa and Gentera is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Gentera SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentera SAB de 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 Gentera SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentera SAB de has no effect on the direction of Visa i.e., Visa and Gentera SAB go up and down completely randomly.

Pair Corralation between Visa and Gentera SAB

Given the investment horizon of 90 days Visa Inc is expected to generate 0.58 times more return on investment than Gentera SAB. However, Visa Inc is 1.71 times less risky than Gentera SAB. It trades about 0.08 of its potential returns per unit of risk. Gentera SAB de is currently generating about 0.03 per unit of risk. If you would invest  394,856  in Visa Inc on September 24, 2024 and sell it today you would earn a total of  243,644  from holding Visa Inc or generate 61.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Visa Inc  vs.  Gentera SAB de

Visa Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 19 (%) 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.

Gentera SAB de

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gentera SAB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Gentera SAB

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

The idea behind Visa Inc and Gentera SAB de 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.