Correlation Between Visa and 10X Genomics

Can any of the company-specific risk be diversified away by investing in both Visa and 10X 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 10X 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 10X Genomics, you can compare the effects of market volatilities on Visa and 10X 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 10X Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and 10X Genomics.

Diversification Opportunities for Visa and 10X Genomics

-0.68

Correlation Coefficient

Visa  10X Genomics

Excellent diversification

The 3 months correlation between Visa and 10X is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and 10X Genomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10X 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 10X Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10X Genomics has no effect on the direction of Visa i.e., Visa and 10X Genomics go up and down completely randomly.

Pair Corralation between Visa and 10X Genomics

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.31 times more return on investment than 10X Genomics. However, Visa Class A is 3.19 times less risky than 10X Genomics. It trades about 0.33 of its potential returns per unit of risk. 10X Genomics is currently generating about -0.06 per unit of risk. If you would invest  28,960  in Visa Class A on August 31, 2024 and sell it today you would earn a total of  2,510  from holding Visa Class A or generate 8.67% 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.  10X 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.

10X Genomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 10X Genomics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Visa and 10X Genomics

The main advantage of trading using opposite Visa and 10X Genomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, 10X 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 10X Genomics will offset losses from the drop in 10X Genomics' long position.

The idea behind Visa Class A and 10X 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.