Correlation Between Visa and Kinross Gold

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

Diversification Opportunities for Visa and Kinross Gold

0.27

Correlation Coefficient

Visa  Kinross Gold

Modest diversification

The 3 months correlation between Visa and Kinross is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold 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 Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of Visa i.e., Visa and Kinross Gold go up and down completely randomly.

Pair Corralation between Visa and Kinross Gold

Taking into account the 90-day investment horizon Visa is expected to generate 1.2 times less return on investment than Kinross Gold. But when comparing it to its historical volatility, Visa Class A is 2.18 times less risky than Kinross Gold. It trades about 0.16 of its potential returns per unit of risk. Kinross Gold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Kinross Gold on August 31, 2024 and sell it today you would earn a total of  120.00  from holding Kinross Gold or generate 13.95% 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.  Kinross Gold

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.

Kinross Gold

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kinross Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Kinross Gold

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

The idea behind Visa Class A and Kinross Gold 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.