Correlation Between Visa and Sprott Junior

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

Diversification Opportunities for Visa and Sprott Junior

-0.49

Correlation Coefficient

Visa  Sprott Junior

Very good diversification

The 3 months correlation between Visa and Sprott is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sprott Junior Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Uranium 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 Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Uranium has no effect on the direction of Visa i.e., Visa and Sprott Junior go up and down completely randomly.

Pair Corralation between Visa and Sprott Junior

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.32 times more return on investment than Sprott Junior. However, Visa Class A is 3.13 times less risky than Sprott Junior. It trades about 0.12 of its potential returns per unit of risk. Sprott Junior Uranium is currently generating about -0.09 per unit of risk. If you would invest  32,037  in Visa Class A on December 26, 2024 and sell it today you would earn a total of  2,425  from holding Visa Class A or generate 7.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Sprott Junior Uranium

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.

Sprott Junior Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Junior Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Etf's basic indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the ETF firm stakeholders.

Pair Trading with Visa and Sprott Junior

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

The idea behind Visa Class A and Sprott Junior Uranium 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.