Correlation Between Visa and Maxeon Solar

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

Diversification Opportunities for Visa and Maxeon Solar

0.38

Correlation Coefficient

Visa  Maxeon Solar

Weak diversification

The 3 months correlation between Visa and Maxeon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Maxeon Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxeon Solar Technologies 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 Maxeon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxeon Solar Technologies has no effect on the direction of Visa i.e., Visa and Maxeon Solar go up and down completely randomly.

Pair Corralation between Visa and Maxeon Solar

Taking into account the 90-day investment horizon Visa is expected to generate 8.35 times less return on investment than Maxeon Solar. But when comparing it to its historical volatility, Visa Class A is 10.81 times less risky than Maxeon Solar. It trades about 0.1 of its potential returns per unit of risk. Maxeon Solar Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Maxeon Solar Technologies on September 17, 2024 and sell it today you would earn a total of  90.00  from holding Maxeon Solar Technologies or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Visa Class A  vs.  Maxeon Solar Technologies

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Maxeon Solar Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maxeon Solar Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Maxeon Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Maxeon Solar

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

The idea behind Visa Class A and Maxeon Solar Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.