Correlation Between Visa and Powertap Hydrogen

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

Diversification Opportunities for Visa and Powertap Hydrogen

0.0

Correlation Coefficient

Visa  Powertap Hydrogen

Pay attention - limited upside

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

Pair Corralation between Visa and Powertap Hydrogen

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.09 times more return on investment than Powertap Hydrogen. However, Visa Class A is 11.6 times less risky than Powertap Hydrogen. It trades about 0.15 of its potential returns per unit of risk. Powertap Hydrogen Capital is currently generating about -0.13 per unit of risk. If you would invest  31,812  in Visa Class A on December 27, 2024 and sell it today you would earn a total of  3,174  from holding Visa Class A or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Powertap Hydrogen Capital

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.

Powertap Hydrogen Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powertap Hydrogen Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Visa and Powertap Hydrogen

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

The idea behind Visa Class A and Powertap Hydrogen Capital 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.