Correlation Between Visa and BCM Resources
Can any of the company-specific risk be diversified away by investing in both Visa and BCM Resources 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 BCM Resources 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 BCM Resources, you can compare the effects of market volatilities on Visa and BCM Resources 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 BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BCM Resources.
Diversification Opportunities for Visa and BCM Resources
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and BCM is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BCM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources 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 BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources has no effect on the direction of Visa i.e., Visa and BCM Resources go up and down completely randomly.
Pair Corralation between Visa and BCM Resources
Taking into account the 90-day investment horizon Visa is expected to generate 2.93 times less return on investment than BCM Resources. But when comparing it to its historical volatility, Visa Class A is 5.98 times less risky than BCM Resources. It trades about 0.34 of its potential returns per unit of risk. BCM Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2.00 in BCM Resources on August 29, 2024 and sell it today you would earn a total of 0.50 from holding BCM Resources or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. BCM Resources
Performance |
| Timeline |
| Visa Class A |
| BCM Resources |
Visa and BCM Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BCM Resources
The main advantage of trading using opposite Visa and BCM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BCM Resources 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 BCM Resources will offset losses from the drop in BCM Resources' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |