Correlation Between Visa and Jura Energy

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

Diversification Opportunities for Visa and Jura Energy

-0.16

Correlation Coefficient

Visa  Jura Energy

Good diversification

The 3 months correlation between Visa and Jura is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jura 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 Class A are associated (or correlated) with Jura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jura Energy has no effect on the direction of Visa i.e., Visa and Jura Energy go up and down completely randomly.

Pair Corralation between Visa and Jura Energy

Taking into account the 90-day investment horizon Visa is expected to generate 1.91 times less return on investment than Jura Energy. But when comparing it to its historical volatility, Visa Class A is 10.15 times less risky than Jura Energy. It trades about 0.1 of its potential returns per unit of risk. Jura Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Jura Energy on March 14, 2024 and sell it today you would lose (2.00) from holding Jura Energy or give up 33.33% of portfolio value over 90 days.

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

Visa Class A  vs.  Jura Energy

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jura Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jura Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jura Energy is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Jura Energy

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

The idea behind Visa Class A and Jura 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.

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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.