Correlation Between Visa and Portmeirion Group

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

Diversification Opportunities for Visa and Portmeirion Group

0.78

Correlation Coefficient

Visa  Portmeirion Group

Poor diversification

The 3 months correlation between Visa and Portmeirion is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Portmeirion Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portmeirion 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 Portmeirion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portmeirion Group PLC has no effect on the direction of Visa i.e., Visa and Portmeirion Group go up and down completely randomly.

Pair Corralation between Visa and Portmeirion Group

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.35 times more return on investment than Portmeirion Group. However, Visa Class A is 2.9 times less risky than Portmeirion Group. It trades about 0.09 of its potential returns per unit of risk. Portmeirion Group PLC is currently generating about -0.04 per unit of risk. If you would invest  20,183  in Visa Class A on September 18, 2024 and sell it today you would earn a total of  11,406  from holding Visa Class A or generate 56.51% return on investment over 90 days.

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

Visa Class A  vs.  Portmeirion Group PLC

Visa Class A

Risk-Adjusted Performance

9 of 100

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Portmeirion Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portmeirion Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Portmeirion Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Portmeirion Group

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

The idea behind Visa Class A and Portmeirion 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..