Correlation Between Visa and Genesis Resources

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

Diversification Opportunities for Visa and Genesis Resources

0.25

Correlation Coefficient

Visa  Genesis Resources

Modest diversification

The 3 months correlation between Visa and Genesis is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Genesis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Resources 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 Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Resources has no effect on the direction of Visa i.e., Visa and Genesis Resources go up and down completely randomly.

Pair Corralation between Visa and Genesis Resources

Taking into account the 90-day investment horizon Visa is expected to generate 3.93 times less return on investment than Genesis Resources. But when comparing it to its historical volatility, Visa Class A is 12.01 times less risky than Genesis Resources. It trades about 0.12 of its potential returns per unit of risk. Genesis Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Genesis Resources on December 20, 2024 and sell it today you would lose (0.10) from holding Genesis Resources or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Visa Class A  vs.  Genesis Resources

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 9 (%) 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 Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Genesis Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Genesis Resources

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

The idea behind Visa Class A and Genesis Resources 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.