Correlation Between Visa and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both Visa and Glencore Plc 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 Glencore Plc 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 Glencore plc, you can compare the effects of market volatilities on Visa and Glencore Plc 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 Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Glencore Plc.
Diversification Opportunities for Visa and Glencore Plc
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Glencore is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc 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 Glencore Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore plc has no effect on the direction of Visa i.e., Visa and Glencore Plc go up and down completely randomly.
Pair Corralation between Visa and Glencore Plc
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.69 times more return on investment than Glencore Plc. However, Visa Class A is 1.44 times less risky than Glencore Plc. It trades about 0.11 of its potential returns per unit of risk. Glencore plc is currently generating about -0.05 per unit of risk. If you would invest 22,897 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 8,573 from holding Visa Class A or generate 37.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.97% |
| Values | Daily Returns |
Visa Class A vs. Glencore plc
Performance |
| Timeline |
| Visa Class A |
| Glencore plc |
Visa and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Glencore Plc
The main advantage of trading using opposite Visa and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Glencore Plc 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 Glencore Plc will offset losses from the drop in Glencore Plc's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Glencore Plc vs. First Republic Bank | Glencore Plc vs. Micron Technology | Glencore Plc vs. Taiwan Semiconductor Manufacturing | Glencore Plc vs. Verizon Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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