Correlation Between Visa and Engie SA

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

Diversification Opportunities for Visa and Engie SA

-0.67

Correlation Coefficient

Visa  Engie SA

Excellent diversification

The 3 months correlation between Visa and Engie is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Visa i.e., Visa and Engie SA go up and down completely randomly.

Pair Corralation between Visa and Engie SA

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.85 times more return on investment than Engie SA. However, Visa Class A is 1.18 times less risky than Engie SA. It trades about 0.09 of its potential returns per unit of risk. Engie SA is currently generating about 0.05 per unit of risk. If you would invest  20,456  in Visa Class A on September 20, 2024 and sell it today you would earn a total of  11,374  from holding Visa Class A or generate 55.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.02%
Values	Daily Returns

Visa Class A  vs.  Engie SA

Visa Class A

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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.

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Engie SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Engie SA

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

The idea behind Visa Class A and Engie SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.