Correlation Between Visa and International Metals
Can any of the company-specific risk be diversified away by investing in both Visa and International Metals 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 International Metals 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 International Metals Mining, you can compare the effects of market volatilities on Visa and International Metals 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 International Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and International Metals.
Diversification Opportunities for Visa and International Metals
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and International is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and International Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Metals 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 International Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Metals has no effect on the direction of Visa i.e., Visa and International Metals go up and down completely randomly.
Pair Corralation between Visa and International Metals
Taking into account the 90-day investment horizon Visa is expected to generate 4.24 times less return on investment than International Metals. But when comparing it to its historical volatility, Visa Class A is 4.23 times less risky than International Metals. It trades about 0.3 of its potential returns per unit of risk. International Metals Mining is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6.50 in International Metals Mining on October 29, 2024 and sell it today you would earn a total of 1.50 from holding International Metals Mining or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Visa Class A vs. International Metals Mining
Performance |
| Timeline |
| Visa Class A |
| International Metals |
Visa and International Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and International Metals
The main advantage of trading using opposite Visa and International Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, International Metals 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 International Metals will offset losses from the drop in International Metals' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| International Metals vs. Dolly Varden Silver | International Metals vs. Reyna Silver Corp | International Metals vs. Aztec Minerals Corp | International Metals vs. Aftermath Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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