Correlation Between Visa and Marex Group

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

Diversification Opportunities for Visa and Marex Group

0.91

Correlation Coefficient

Visa  Marex Group

Almost no diversification

The 3 months correlation between Visa and Marex is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Visa i.e., Visa and Marex Group go up and down completely randomly.

Pair Corralation between Visa and Marex Group

Taking into account the 90-day investment horizon Visa is expected to generate 1.47 times less return on investment than Marex Group. But when comparing it to its historical volatility, Visa Class A is 1.29 times less risky than Marex Group. It trades about 0.16 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,439  in Marex Group plc on September 2, 2024 and sell it today you would earn a total of  489.00  from holding Marex Group plc or generate 20.05% return on investment over 90 days.

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

Visa Class A  vs.  Marex Group plc

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Marex Group plc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Marex Group

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

The idea behind Visa Class A and Marex Group plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.