Correlation Between Visa and Sibanye Gold
Can any of the company-specific risk be diversified away by investing in both Visa and Sibanye 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 Sibanye 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 Sibanye Gold Ltd, you can compare the effects of market volatilities on Visa and Sibanye 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 Sibanye Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sibanye Gold.
Diversification Opportunities for Visa and Sibanye Gold
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Sibanye is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sibanye Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye 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 Sibanye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Gold has no effect on the direction of Visa i.e., Visa and Sibanye Gold go up and down completely randomly.
Pair Corralation between Visa and Sibanye Gold
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.32 times more return on investment than Sibanye Gold. However, Visa Class A is 3.12 times less risky than Sibanye Gold. It trades about 0.33 of its potential returns per unit of risk. Sibanye Gold Ltd is currently generating about -0.23 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% 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. Sibanye Gold Ltd
Performance |
| Timeline |
| Visa Class A |
| Sibanye Gold |
Visa and Sibanye Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sibanye Gold
The main advantage of trading using opposite Visa and Sibanye Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sibanye 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 Sibanye Gold will offset losses from the drop in Sibanye Gold's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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