Correlation Between Visa and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Visa and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources America, you can compare the effects of market volatilities on Visa and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sandfire Resources.
Diversification Opportunities for Visa and Sandfire Resources
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Sandfire is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Visa i.e., Visa and Sandfire Resources go up and down completely randomly.
Pair Corralation between Visa and Sandfire Resources
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.2 times more return on investment than Sandfire Resources. However, Visa Class A is 5.05 times less risky than Sandfire Resources. It trades about 0.35 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.03 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Sandfire Resources America
Performance |
| Timeline |
| Visa Class A |
| Sandfire Resources |
Visa and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sandfire Resources
The main advantage of trading using opposite Visa and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Sandfire Resources vs. Richmond Minerals | Sandfire Resources vs. Pacific Bay Minerals | Sandfire Resources vs. Cobalt Power Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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