Correlation Between Visa and Bionano Genomics

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

Diversification Opportunities for Visa and Bionano Genomics

-0.73

Correlation Coefficient

Visa  Bionano Genomics

Pay attention - limited upside

The 3 months correlation between Visa and Bionano is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bionano Genomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionano Genomics 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 Bionano Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionano Genomics has no effect on the direction of Visa i.e., Visa and Bionano Genomics go up and down completely randomly.

Pair Corralation between Visa and Bionano Genomics

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.24 times more return on investment than Bionano Genomics. However, Visa Class A is 4.17 times less risky than Bionano Genomics. It trades about 0.16 of its potential returns per unit of risk. Bionano Genomics is currently generating about -0.14 per unit of risk. If you would invest  27,801  in Visa Class A on September 2, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

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

Visa Class A  vs.  Bionano Genomics

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.

Bionano Genomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bionano Genomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Visa and Bionano Genomics

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

The idea behind Visa Class A and Bionano Genomics 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.