Correlation Between Visa and Southern Hemisphere
Can any of the company-specific risk be diversified away by investing in both Visa and Southern Hemisphere 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 Southern Hemisphere 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 Southern Hemisphere Mining, you can compare the effects of market volatilities on Visa and Southern Hemisphere 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 Southern Hemisphere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Southern Hemisphere.
Diversification Opportunities for Visa and Southern Hemisphere
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Southern is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Southern Hemisphere Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Hemisphere 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 Southern Hemisphere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Hemisphere has no effect on the direction of Visa i.e., Visa and Southern Hemisphere go up and down completely randomly.
Pair Corralation between Visa and Southern Hemisphere
Taking into account the 90-day investment horizon Visa is expected to generate 2.04 times less return on investment than Southern Hemisphere. But when comparing it to its historical volatility, Visa Class A is 7.05 times less risky than Southern Hemisphere. It trades about 0.57 of its potential returns per unit of risk. Southern Hemisphere Mining is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Southern Hemisphere Mining on November 7, 2024 and sell it today you would earn a total of 0.60 from holding Southern Hemisphere Mining or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Southern Hemisphere Mining
Performance |
| Timeline |
| Visa Class A |
| Southern Hemisphere |
Visa and Southern Hemisphere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Southern Hemisphere
The main advantage of trading using opposite Visa and Southern Hemisphere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Southern Hemisphere 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 Southern Hemisphere will offset losses from the drop in Southern Hemisphere's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
| Southern Hemisphere vs. Red Hill Iron | Southern Hemisphere vs. Aristocrat Leisure | Southern Hemisphere vs. Legacy Iron Ore | Southern Hemisphere vs. Iron Road |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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