Correlation Between Visa and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Visa and Franco Nevada 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 Franco Nevada 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 Franco Nevada, you can compare the effects of market volatilities on Visa and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Franco Nevada.
Diversification Opportunities for Visa and Franco Nevada
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Franco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Visa i.e., Visa and Franco Nevada go up and down completely randomly.
Pair Corralation between Visa and Franco Nevada
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.66 times more return on investment than Franco Nevada. However, Visa Class A is 1.51 times less risky than Franco Nevada. It trades about 0.31 of its potential returns per unit of risk. Franco Nevada is currently generating about -0.19 per unit of risk. If you would invest 28,322 in Visa Class A on August 24, 2024 and sell it today you would earn a total of 2,670 from holding Visa Class A or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Franco Nevada
Performance |
| Timeline |
| Visa Class A |
| Franco Nevada |
Visa and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Franco Nevada
The main advantage of trading using opposite Visa and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Franco Nevada vs. Wheaton Precious Metals | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Alamos Gold | Franco Nevada vs. Osisko Gold Ro |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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