Correlation Between Visa and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Visa and Barrick Gold 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 Barrick Gold 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 Barrick Gold, you can compare the effects of market volatilities on Visa and Barrick Gold 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 Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Barrick Gold.
Diversification Opportunities for Visa and Barrick Gold
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Barrick is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold has no effect on the direction of Visa i.e., Visa and Barrick Gold go up and down completely randomly.
Pair Corralation between Visa and Barrick Gold
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.61 times more return on investment than Barrick Gold. However, Visa Class A is 1.64 times less risky than Barrick Gold. It trades about 0.33 of its potential returns per unit of risk. Barrick Gold is currently generating about -0.23 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. Barrick Gold
Performance |
| Timeline |
| Visa Class A |
| Barrick Gold |
Visa and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Barrick Gold
The main advantage of trading using opposite Visa and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Barrick Gold 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 Barrick Gold will offset losses from the drop in Barrick Gold's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Barrick Gold vs. Kaiser Aluminum | Barrick Gold vs. AGRICULTBK HADR25 YC | Barrick Gold vs. PARKEN Sport Entertainment | Barrick Gold vs. DAIRY FARM INTL |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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