Correlation Between Visa and Liberty Energy

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

Diversification Opportunities for Visa and Liberty Energy

-0.03

Correlation Coefficient

Visa  Liberty Energy

Good diversification

The 3 months correlation between Visa and Liberty is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Liberty Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Energy Corp 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 Liberty Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Energy Corp has no effect on the direction of Visa i.e., Visa and Liberty Energy go up and down completely randomly.

Pair Corralation between Visa and Liberty Energy

If you would invest  30,964  in Visa Class A on September 16, 2024 and sell it today you would earn a total of  510.00  from holding Visa Class A or generate 1.65% return on investment over 90 days.

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

Visa Class A  vs.  Liberty Energy Corp

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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.

Liberty Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Liberty Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Liberty Energy

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

The idea behind Visa Class A and Liberty Energy Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.