Correlation Between Visa and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Visa and Lynas Rare 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 Lynas Rare 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 Lynas Rare Earths, you can compare the effects of market volatilities on Visa and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lynas Rare.
Diversification Opportunities for Visa and Lynas Rare
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Lynas is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Visa i.e., Visa and Lynas Rare go up and down completely randomly.
Pair Corralation between Visa and Lynas Rare
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Lynas Rare. However, Visa Class A is 1.99 times less risky than Lynas Rare. It trades about 0.11 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about 0.01 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lynas Rare Earths
Performance |
| Timeline |
| Visa Class A |
| Lynas Rare Earths |
Visa and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lynas Rare
The main advantage of trading using opposite Visa and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |