Correlation Between Visa and Australian Mines
Can any of the company-specific risk be diversified away by investing in both Visa and Australian Mines 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 Australian Mines 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 Australian Mines Limited, you can compare the effects of market volatilities on Visa and Australian Mines 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 Australian Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Australian Mines.
Diversification Opportunities for Visa and Australian Mines
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and Australian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Australian Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Mines 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 Australian Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Mines has no effect on the direction of Visa i.e., Visa and Australian Mines go up and down completely randomly.
Pair Corralation between Visa and Australian Mines
Taking into account the 90-day investment horizon Visa is expected to generate 63.7 times less return on investment than Australian Mines. But when comparing it to its historical volatility, Visa Class A is 53.82 times less risky than Australian Mines. It trades about 0.09 of its potential returns per unit of risk. Australian Mines Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.87 in Australian Mines Limited on August 25, 2024 and sell it today you would earn a total of 0.04 from holding Australian Mines Limited or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Visa Class A vs. Australian Mines Limited
Performance |
| Timeline |
| Visa Class A |
| Australian Mines |
Visa and Australian Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Australian Mines
The main advantage of trading using opposite Visa and Australian Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Australian Mines 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 Australian Mines will offset losses from the drop in Australian Mines' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Australian Mines vs. Aurelia Metals Limited | Australian Mines vs. Artemis Resources | Australian Mines vs. Ascendant Resources | Australian Mines vs. Azimut Exploration |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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