Correlation Between Visa and Genesis Energy

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

Diversification Opportunities for Visa and Genesis Energy

0.51

Correlation Coefficient

Visa  Genesis Energy

Very weak diversification

The 3 months correlation between Visa and Genesis is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP 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 Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Visa i.e., Visa and Genesis Energy go up and down completely randomly.

Pair Corralation between Visa and Genesis Energy

Taking into account the 90-day investment horizon Visa is expected to generate 4.8 times less return on investment than Genesis Energy. But when comparing it to its historical volatility, Visa Class A is 2.51 times less risky than Genesis Energy. It trades about 0.15 of its potential returns per unit of risk. Genesis Energy LP is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,004  in Genesis Energy LP on December 27, 2024 and sell it today you would earn a total of  572.00  from holding Genesis Energy LP or generate 56.97% return on investment over 90 days.

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

Visa Class A  vs.  Genesis Energy LP

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Genesis Energy LP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy LP are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Genesis Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Genesis Energy

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

The idea behind Visa Class A and Genesis Energy LP 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.