Correlation Between Visa and Eminent Gold
Can any of the company-specific risk be diversified away by investing in both Visa and Eminent 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 Eminent 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 Eminent Gold Corp, you can compare the effects of market volatilities on Visa and Eminent 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 Eminent Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Eminent Gold.
Diversification Opportunities for Visa and Eminent Gold
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Eminent is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Eminent Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Gold Corp 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 Eminent Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Gold Corp has no effect on the direction of Visa i.e., Visa and Eminent Gold go up and down completely randomly.
Pair Corralation between Visa and Eminent Gold
Taking into account the 90-day investment horizon Visa is expected to generate 5.33 times less return on investment than Eminent Gold. But when comparing it to its historical volatility, Visa Class A is 5.56 times less risky than Eminent Gold. It trades about 0.07 of its potential returns per unit of risk. Eminent Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Eminent Gold Corp on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Eminent Gold Corp or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Visa Class A vs. Eminent Gold Corp
Performance |
| Timeline |
| Visa Class A |
| Eminent Gold Corp |
Visa and Eminent Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Eminent Gold
The main advantage of trading using opposite Visa and Eminent Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Eminent 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 Eminent Gold will offset losses from the drop in Eminent Gold's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Eminent Gold vs. Thunderstruck Resources | Eminent Gold vs. Aston Minerals | Eminent Gold vs. Tarku Resources | Eminent Gold vs. Murchison Minerals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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