Correlation Between Visa and Colibri Resource

Can any of the company-specific risk be diversified away by investing in both Visa and Colibri Resource 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 Colibri Resource 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 Colibri Resource Corp, you can compare the effects of market volatilities on Visa and Colibri Resource 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 Colibri Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Colibri Resource.

Diversification Opportunities for Visa and Colibri Resource

-0.86

Correlation Coefficient

Visa  Colibri Resource

Pay attention - limited upside

The 3 months correlation between Visa and Colibri is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Colibri Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colibri Resource 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 Colibri Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colibri Resource Corp has no effect on the direction of Visa i.e., Visa and Colibri Resource go up and down completely randomly.

Pair Corralation between Visa and Colibri Resource

Taking into account the 90-day investment horizon Visa is expected to generate 17.79 times less return on investment than Colibri Resource. But when comparing it to its historical volatility, Visa Class A is 16.05 times less risky than Colibri Resource. It trades about 0.06 of its potential returns per unit of risk. Colibri Resource Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Colibri Resource Corp on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Colibri Resource Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Visa Class A  vs.  Colibri Resource Corp

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Colibri Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colibri Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Visa and Colibri Resource

The main advantage of trading using opposite Visa and Colibri Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Colibri Resource 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 Colibri Resource will offset losses from the drop in Colibri Resource's long position.

The idea behind Visa Class A and Colibri Resource Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.