Correlation Between Visa and Jaguar Mining

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

Diversification Opportunities for Visa and Jaguar Mining

-0.9

Correlation Coefficient

Visa  Jaguar Mining

Pay attention - limited upside

The 3 months correlation between Visa and Jaguar is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jaguar Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Mining 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 Jaguar Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Mining has no effect on the direction of Visa i.e., Visa and Jaguar Mining go up and down completely randomly.

Pair Corralation between Visa and Jaguar Mining

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.24 times more return on investment than Jaguar Mining. However, Visa Class A is 4.11 times less risky than Jaguar Mining. It trades about 0.24 of its potential returns per unit of risk. Jaguar Mining is currently generating about -0.29 per unit of risk. If you would invest  26,911  in Visa Class A on September 25, 2024 and sell it today you would earn a total of  4,811  from holding Visa Class A or generate 17.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Visa Class A  vs.  Jaguar Mining

Visa Class A

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) 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.

Jaguar Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaguar Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Visa and Jaguar Mining

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

The idea behind Visa Class A and Jaguar Mining 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.