Correlation Between Visa and Warrior Met

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Can any of the company-specific risk be diversified away by investing in both Visa and Warrior Met 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 Warrior Met 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 Warrior Met Coal, you can compare the effects of market volatilities on Visa and Warrior Met 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 Warrior Met. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Warrior Met.

Diversification Opportunities for Visa and Warrior Met

VisaWarriorDiversified AwayVisaWarriorDiversified Away100%
-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Visa and Warrior is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Warrior Met Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warrior Met Coal 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 Warrior Met. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warrior Met Coal has no effect on the direction of Visa i.e., Visa and Warrior Met go up and down completely randomly.

Pair Corralation between Visa and Warrior Met

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.36 times more return on investment than Warrior Met. However, Visa Class A is 2.75 times less risky than Warrior Met. It trades about 0.1 of its potential returns per unit of risk. Warrior Met Coal is currently generating about 0.03 per unit of risk. If you would invest  21,882  in Visa Class A on November 27, 2024 and sell it today you would earn a total of  12,971  from holding Visa Class A or generate 59.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Visa Class A  vs.  Warrior Met Coal

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15V HCC
       Timeline  
Visa Class A 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb310320330340350
Warrior Met Coal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Warrior Met Coal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5055606570

Visa and Warrior Met Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.72-2.04-1.35-0.670.00.761.522.283.03 0.10.20.30.4
JavaScript chart by amCharts 3.21.15V HCC
       Returns  

Pair Trading with Visa and Warrior Met

The main advantage of trading using opposite Visa and Warrior Met positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Warrior Met 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 Warrior Met will offset losses from the drop in Warrior Met's long position.
The idea behind Visa Class A and Warrior Met Coal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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