Correlation Between Visa and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Visa and Lundin Mining 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 Lundin Mining 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 Lundin Mining, you can compare the effects of market volatilities on Visa and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lundin Mining.
Diversification Opportunities for Visa and Lundin Mining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Lundin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of Visa i.e., Visa and Lundin Mining go up and down completely randomly.
Pair Corralation between Visa and Lundin Mining
Taking into account the 90-day investment horizon Visa is expected to generate 1.51 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, Visa Class A is 2.58 times less risky than Lundin Mining. It trades about 0.09 of its potential returns per unit of risk. Lundin Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Lundin Mining on September 13, 2024 and sell it today you would earn a total of 371.00 from holding Lundin Mining or generate 71.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Visa Class A vs. Lundin Mining
Performance |
| Timeline |
| Visa Class A |
| Lundin Mining |
Visa and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lundin Mining
The main advantage of trading using opposite Visa and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lundin Mining vs. Southern Copper | Lundin Mining vs. Sandfire Resources Limited | Lundin Mining vs. Superior Plus Corp | Lundin Mining vs. NMI Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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