Correlation Between Visa and Siemens

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

Diversification Opportunities for Visa and Siemens

-0.17

Correlation Coefficient

Visa  Siemens

Good diversification

The 3 months correlation between Visa and Siemens is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Siemens Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Limited 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 Siemens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Limited has no effect on the direction of Visa i.e., Visa and Siemens go up and down completely randomly.

Pair Corralation between Visa and Siemens

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.36 times more return on investment than Siemens. However, Visa Class A is 2.79 times less risky than Siemens. It trades about -0.02 of its potential returns per unit of risk. Siemens Limited is currently generating about -0.43 per unit of risk. If you would invest  31,379  in Visa Class A on October 12, 2024 and sell it today you would lose (119.00) from holding Visa Class A or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Siemens Limited

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 February 2025.

Siemens Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and Siemens

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

The idea behind Visa Class A and Siemens Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.