Correlation Between Visa and Copper Road

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

Diversification Opportunities for Visa and Copper Road

-0.08

Correlation Coefficient

Visa  Copper Road

Good diversification

The 3 months correlation between Visa and Copper is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Copper Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Road 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 Copper Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Road Resources has no effect on the direction of Visa i.e., Visa and Copper Road go up and down completely randomly.

Pair Corralation between Visa and Copper Road

Taking into account the 90-day investment horizon Visa is expected to generate 17.58 times less return on investment than Copper Road. But when comparing it to its historical volatility, Visa Class A is 16.72 times less risky than Copper Road. It trades about 0.11 of its potential returns per unit of risk. Copper Road Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Copper Road Resources on December 19, 2024 and sell it today you would earn a total of  0.50  from holding Copper Road Resources or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Visa Class A  vs.  Copper Road Resources

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Copper Road Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Road Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Copper Road showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Copper Road

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

The idea behind Visa Class A and Copper Road Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.