Correlation Between Visa and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both Visa and Outcrop 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 Outcrop 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 Outcrop Gold Corp, you can compare the effects of market volatilities on Visa and Outcrop 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Outcrop Gold.
Diversification Opportunities for Visa and Outcrop Gold
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Outcrop is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold Corp 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Visa i.e., Visa and Outcrop Gold go up and down completely randomly.
Pair Corralation between Visa and Outcrop Gold
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.23 times more return on investment than Outcrop Gold. However, Visa Class A is 4.37 times less risky than Outcrop Gold. It trades about 0.34 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about -0.09 per unit of risk. If you would invest 29,129 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 2,536 from holding Visa Class A or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Outcrop Gold Corp
Performance |
| Timeline |
| Visa Class A |
| Outcrop Gold Corp |
Visa and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Outcrop Gold
The main advantage of trading using opposite Visa and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Outcrop 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Outcrop Gold vs. CMC Metals | Outcrop Gold vs. Capitan Mining | Outcrop Gold vs. Cartier Iron Corp | Outcrop Gold vs. Alien Metals |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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