Correlation Between Visa and PUMA SE

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

Diversification Opportunities for Visa and PUMA SE

-0.92

Correlation Coefficient

Visa  PUMA SE

Pay attention - limited upside

The 3 months correlation between Visa and PUMA is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PUMA SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUMA SE 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 PUMA SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUMA SE has no effect on the direction of Visa i.e., Visa and PUMA SE go up and down completely randomly.

Pair Corralation between Visa and PUMA SE

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.28 times more return on investment than PUMA SE. However, Visa Class A is 3.53 times less risky than PUMA SE. It trades about 0.43 of its potential returns per unit of risk. PUMA SE is currently generating about -0.32 per unit of risk. If you would invest  31,251  in Visa Class A on December 5, 2024 and sell it today you would earn a total of  4,931  from holding Visa Class A or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.7%
Values	Daily Returns

Visa Class A  vs.  PUMA SE

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) 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.

PUMA SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days PUMA SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 PUMA SE

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

The idea behind Visa Class A and PUMA SE 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.