Correlation Between Visa and Widgie Nickel
Can any of the company-specific risk be diversified away by investing in both Visa and Widgie Nickel 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 Widgie Nickel 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 Widgie Nickel Limited, you can compare the effects of market volatilities on Visa and Widgie Nickel 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 Widgie Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Widgie Nickel.
Diversification Opportunities for Visa and Widgie Nickel
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Widgie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Widgie Nickel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widgie Nickel Limited 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 Widgie Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widgie Nickel Limited has no effect on the direction of Visa i.e., Visa and Widgie Nickel go up and down completely randomly.
Pair Corralation between Visa and Widgie Nickel
Taking into account the 90-day investment horizon Visa is expected to generate 20.06 times less return on investment than Widgie Nickel. But when comparing it to its historical volatility, Visa Class A is 47.03 times less risky than Widgie Nickel. It trades about 0.21 of its potential returns per unit of risk. Widgie Nickel Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Widgie Nickel Limited on October 26, 2024 and sell it today you would lose (1.28) from holding Widgie Nickel Limited or give up 51.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Widgie Nickel Limited
Performance |
| Timeline |
| Visa Class A |
| Widgie Nickel Limited |
Visa and Widgie Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Widgie Nickel
The main advantage of trading using opposite Visa and Widgie Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Widgie Nickel 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 Widgie Nickel will offset losses from the drop in Widgie Nickel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Widgie Nickel vs. Mason Graphite | Widgie Nickel vs. Rockridge Resources | Widgie Nickel vs. Volt Lithium Corp | Widgie Nickel vs. Northern Graphite |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |