Correlation Between Visa and Northern Star
Can any of the company-specific risk be diversified away by investing in both Visa and Northern Star 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 Star 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 Star Resources, you can compare the effects of market volatilities on Visa and Northern Star 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 Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Northern Star.
Diversification Opportunities for Visa and Northern Star
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Northern is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Visa i.e., Visa and Northern Star go up and down completely randomly.
Pair Corralation between Visa and Northern Star
Taking into account the 90-day investment horizon Visa is expected to generate 2.17 times less return on investment than Northern Star. But when comparing it to its historical volatility, Visa Class A is 2.08 times less risky than Northern Star. It trades about 0.08 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 731.00 in Northern Star Resources on August 27, 2024 and sell it today you would earn a total of 363.00 from holding Northern Star Resources or generate 49.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Visa Class A vs. Northern Star Resources
Performance |
| Timeline |
| Visa Class A |
| Northern Star Resources |
Visa and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Northern Star
The main advantage of trading using opposite Visa and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Northern Star 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 Star will offset losses from the drop in Northern Star's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Northern Star vs. Franco Nevada | Northern Star vs. Agnico Eagle Mines | Northern Star vs. Superior Plus Corp | Northern Star vs. NMI Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |