Correlation Between Visa and Genpact
Can any of the company-specific risk be diversified away by investing in both Visa and Genpact 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 Genpact 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 Genpact Limited, you can compare the effects of market volatilities on Visa and Genpact 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 Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Genpact.
Diversification Opportunities for Visa and Genpact
Good diversification
The 3 months correlation between Visa and Genpact is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Visa i.e., Visa and Genpact go up and down completely randomly.
Pair Corralation between Visa and Genpact
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Genpact. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.77 times less risky than Genpact. The stock trades about -0.41 of its potential returns per unit of risk. The Genpact Limited is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 3,354 in Genpact Limited on January 20, 2024 and sell it today you would lose (195.00) from holding Genpact Limited or give up 5.81% 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. Genpact Limited
Performance |
| Timeline |
| Visa Class A |
| Genpact Limited |
Visa and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Genpact
The main advantage of trading using opposite Visa and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. Perficient | Genpact vs. Science Applications International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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