Correlation Between Visa and Eminent Gold

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

Diversification Opportunities for Visa and Eminent Gold

0.15

Correlation Coefficient

Visa  Eminent Gold

Average diversification

The 3 months correlation between Visa and Eminent is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Eminent Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Gold 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 Eminent Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Gold Corp has no effect on the direction of Visa i.e., Visa and Eminent Gold go up and down completely randomly.

Pair Corralation between Visa and Eminent Gold

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.25 times more return on investment than Eminent Gold. However, Visa Class A is 3.93 times less risky than Eminent Gold. It trades about 0.15 of its potential returns per unit of risk. Eminent Gold Corp is currently generating about 0.02 per unit of risk. If you would invest  27,809  in Visa Class A on September 5, 2024 and sell it today you would earn a total of  3,492  from holding Visa Class A or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Eminent Gold Corp

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 January 2025.

Eminent Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eminent Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eminent Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Eminent Gold

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

The idea behind Visa Class A and Eminent Gold 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..