Correlation Between Visa and Trilogy Metals

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

Diversification Opportunities for Visa and Trilogy Metals

-0.51

Correlation Coefficient

Visa  Trilogy Metals

Excellent diversification

The 3 months correlation between Visa and Trilogy is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals 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 Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of Visa i.e., Visa and Trilogy Metals go up and down completely randomly.

Pair Corralation between Visa and Trilogy Metals

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Trilogy Metals. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 3.5 times less risky than Trilogy Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Trilogy Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  166.00  in Trilogy Metals on May 6, 2025 and sell it today you would lose (7.00) from holding Trilogy Metals or give up 4.22% of portfolio value over 90 days.

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

Visa Class A  vs.  Trilogy Metals

Visa Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Trilogy Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trilogy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Trilogy Metals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Visa and Trilogy Metals

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

The idea behind Visa Class A and Trilogy Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.