Correlation Between Visa and Osisko Gold

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

Diversification Opportunities for Visa and Osisko Gold

0.31

Correlation Coefficient

Visa  Osisko Gold

Weak diversification

The 3 months correlation between Visa and Osisko is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Osisko Gold Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Gold Ro 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 Osisko Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Gold Ro has no effect on the direction of Visa i.e., Visa and Osisko Gold go up and down completely randomly.

Pair Corralation between Visa and Osisko Gold

Taking into account the 90-day investment horizon Visa is expected to generate 1.23 times less return on investment than Osisko Gold. But when comparing it to its historical volatility, Visa Class A is 1.37 times less risky than Osisko Gold. It trades about 0.16 of its potential returns per unit of risk. Osisko Gold Ro is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,667  in Osisko Gold Ro on September 1, 2024 and sell it today you would earn a total of  271.00  from holding Osisko Gold Ro or generate 16.26% return on investment over 90 days.

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

Visa Class A  vs.  Osisko Gold Ro

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Osisko Gold Ro

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Gold Ro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Osisko Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Osisko Gold

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

The idea behind Visa Class A and Osisko Gold Ro 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.