Correlation Between Visa and PowerShares

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

Diversification Opportunities for Visa and PowerShares

0.0

Correlation Coefficient

Visa  PowerShares

Pay attention - limited upside

The 3 months correlation between Visa and PowerShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PowerShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares 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 PowerShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares has no effect on the direction of Visa i.e., Visa and PowerShares go up and down completely randomly.

Pair Corralation between Visa and PowerShares

If you would invest  31,319  in Visa Class A on September 25, 2024 and sell it today you would earn a total of  746.00  from holding Visa Class A or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  PowerShares

Visa Class A

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

PowerShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, PowerShares is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and PowerShares

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

The idea behind Visa Class A and PowerShares 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.