Correlation Between Visa and Fuji Electric

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

Diversification Opportunities for Visa and Fuji Electric

0.08

Correlation Coefficient

Visa  Fuji Electric

Significant diversification

The 3 months correlation between Visa and Fuji is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fuji Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Electric 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 Fuji Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Electric has no effect on the direction of Visa i.e., Visa and Fuji Electric go up and down completely randomly.

Pair Corralation between Visa and Fuji Electric

Taking into account the 90-day investment horizon Visa is expected to generate 2.43 times less return on investment than Fuji Electric. But when comparing it to its historical volatility, Visa Class A is 2.39 times less risky than Fuji Electric. It trades about 0.11 of its potential returns per unit of risk. Fuji Electric Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Fuji Electric Co on September 13, 2024 and sell it today you would earn a total of  56.00  from holding Fuji Electric Co or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Fuji Electric Co

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

Fuji Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Electric Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Fuji Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Fuji Electric

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

The idea behind Visa Class A and Fuji Electric Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.