Correlation Between Visa and Lomiko Metals
Can any of the company-specific risk be diversified away by investing in both Visa and Lomiko 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 Lomiko 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 Lomiko Metals, you can compare the effects of market volatilities on Visa and Lomiko 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 Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lomiko Metals.
Diversification Opportunities for Visa and Lomiko Metals
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Lomiko is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko 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 Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Visa i.e., Visa and Lomiko Metals go up and down completely randomly.
Pair Corralation between Visa and Lomiko Metals
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.21 times more return on investment than Lomiko Metals. However, Visa Class A is 4.85 times less risky than Lomiko Metals. It trades about 0.11 of its potential returns per unit of risk. Lomiko Metals is currently generating about -0.12 per unit of risk. If you would invest 26,932 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lomiko Metals
Performance |
| Timeline |
| Visa Class A |
| Lomiko Metals |
Visa and Lomiko Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lomiko Metals
The main advantage of trading using opposite Visa and Lomiko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lomiko 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 Lomiko Metals will offset losses from the drop in Lomiko Metals' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lomiko Metals vs. Sangoma Technologies Corp | Lomiko Metals vs. AGF Management Limited | Lomiko Metals vs. Metalero Mining Corp | Lomiko Metals vs. Altair Resources |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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