Correlation Between Visa and Premium Nickel

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

Diversification Opportunities for Visa and Premium Nickel

-0.67

Correlation Coefficient

Visa  Premium Nickel

Excellent diversification

The 3 months correlation between Visa and Premium is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Visa i.e., Visa and Premium Nickel go up and down completely randomly.

Pair Corralation between Visa and Premium Nickel

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.2 times more return on investment than Premium Nickel. However, Visa Class A is 4.93 times less risky than Premium Nickel. It trades about 0.13 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.12 per unit of risk. If you would invest  31,812  in Visa Class A on December 27, 2024 and sell it today you would earn a total of  2,606  from holding Visa Class A or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	51.67%
Values	Daily Returns

Visa Class A  vs.  Premium Nickel 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 9 (%) 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.

Premium Nickel Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Nickel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Visa and Premium Nickel

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

The idea behind Visa Class A and Premium Nickel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.