Correlation Between Visa and Northern Lion
Can any of the company-specific risk be diversified away by investing in both Visa and Northern Lion 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 Northern Lion 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 Northern Lion Gold, you can compare the effects of market volatilities on Visa and Northern Lion 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 Northern Lion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Northern Lion.
Diversification Opportunities for Visa and Northern Lion
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Northern Lion Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lion 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 Northern Lion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lion Gold has no effect on the direction of Visa i.e., Visa and Northern Lion go up and down completely randomly.
Pair Corralation between Visa and Northern Lion
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.6 times more return on investment than Northern Lion. However, Visa Class A is 1.66 times less risky than Northern Lion. It trades about 0.09 of its potential returns per unit of risk. Northern Lion Gold is currently generating about -0.04 per unit of risk. If you would invest 20,266 in Visa Class A on September 13, 2024 and sell it today you would earn a total of 11,113 from holding Visa Class A or generate 54.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Northern Lion Gold
Performance |
| Timeline |
| Visa Class A |
| Northern Lion Gold |
Visa and Northern Lion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Northern Lion
The main advantage of trading using opposite Visa and Northern Lion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Northern Lion 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 Northern Lion will offset losses from the drop in Northern Lion's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Northern Lion vs. Boston Beer | Northern Lion vs. Sealed Air | Northern Lion vs. Park Electrochemical | Northern Lion vs. Westrock Coffee |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
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