Correlation Between Visa and Uber Technologies

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

Diversification Opportunities for Visa and Uber Technologies

-0.61

Correlation Coefficient

Visa  Uber Technologies

Excellent diversification

The 3 months correlation between Visa and Uber is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Visa i.e., Visa and Uber Technologies go up and down completely randomly.

Pair Corralation between Visa and Uber Technologies

Taking into account the 90-day investment horizon Visa is expected to generate 2.24 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Visa Class A is 2.61 times less risky than Uber Technologies. It trades about 0.09 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,401  in Uber Technologies on September 23, 2024 and sell it today you would earn a total of  3,459  from holding Uber Technologies or generate 144.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.03%
Values	Daily Returns

Visa Class A  vs.  Uber Technologies

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.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Visa and Uber Technologies

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

The idea behind Visa Class A and Uber Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.