Correlation Between Visa and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both Visa and Lundin Gold 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 Gold 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 Gold, you can compare the effects of market volatilities on Visa and Lundin Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lundin Gold.
Diversification Opportunities for Visa and Lundin Gold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Lundin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold 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 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Visa i.e., Visa and Lundin Gold go up and down completely randomly.
Pair Corralation between Visa and Lundin Gold
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.41 times more return on investment than Lundin Gold. However, Visa Class A is 2.45 times less risky than Lundin Gold. It trades about 0.35 of its potential returns per unit of risk. Lundin Gold is currently generating about -0.02 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. Lundin Gold
Performance |
| Timeline |
| Visa Class A |
| Lundin Gold |
Visa and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lundin Gold
The main advantage of trading using opposite Visa and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lundin Gold 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 Gold will offset losses from the drop in Lundin Gold's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lundin Gold vs. Lundin Mining | Lundin Gold vs. Africa Oil Corp | Lundin Gold vs. International Petroleum | Lundin Gold vs. Boliden AB |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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