Correlation Between Visa and Ipsen SA

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

Diversification Opportunities for Visa and Ipsen SA

-0.68

Correlation Coefficient

Visa  Ipsen SA

Excellent diversification

The 3 months correlation between Visa and Ipsen is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA 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 Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of Visa i.e., Visa and Ipsen SA go up and down completely randomly.

Pair Corralation between Visa and Ipsen SA

Taking into account the 90-day investment horizon Visa is expected to generate 5.47 times less return on investment than Ipsen SA. But when comparing it to its historical volatility, Visa Class A is 1.37 times less risky than Ipsen SA. It trades about 0.09 of its potential returns per unit of risk. Ipsen SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  10,900  in Ipsen SA on October 9, 2024 and sell it today you would earn a total of  830.00  from holding Ipsen SA or generate 7.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Visa Class A  vs.  Ipsen SA

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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.

Ipsen SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Ipsen SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Ipsen SA

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

The idea behind Visa Class A and Ipsen SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.