Correlation Between Visa and Nexera Energy

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Can any of the company-specific risk be diversified away by investing in both Visa and Nexera 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 Nexera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc and Nexera Energy, you can compare the effects of market volatilities on Visa and Nexera 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 Nexera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nexera Energy.

Diversification Opportunities for Visa and Nexera Energy

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Visa and Nexera is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Nexera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexera Energy 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 Inc are associated (or correlated) with Nexera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexera Energy has no effect on the direction of Visa i.e., Visa and Nexera Energy go up and down completely randomly.

Pair Corralation between Visa and Nexera Energy

Taking into account the 90-day investment horizon Visa Inc is expected to generate 0.36 times more return on investment than Nexera Energy. However, Visa Inc is 2.79 times less risky than Nexera Energy. It trades about 0.05 of its potential returns per unit of risk. Nexera Energy is currently generating about -0.22 per unit of risk. If you would invest  21,299  in Visa Inc on May 21, 2022 and sell it today you would earn a total of  226.00  from holding Visa Inc or generate 1.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Visa Inc  vs.  Nexera Energy

 Performance (%) 
       Timeline  
Visa Inc 
Visa Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Visa Price Channel

Nexera Energy 
Nexera Performance
0 of 100
Over the last 90 days Nexera Energy 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 basic indicators remain rather sound which may send shares a bit higher in September 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nexera Price Channel

Visa and Nexera Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Nexera Energy

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

Nexera Energy

Pair trading matchups for Nexera Energy

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 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.

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