Correlation Between Visa and Trina Solar
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By analyzing existing cross correlation between Visa Class A and Trina Solar Co, you can compare the effects of market volatilities on Visa and Trina Solar 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 Trina Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Trina Solar.
Diversification Opportunities for Visa and Trina Solar
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Trina is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Trina Solar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trina Solar 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 Trina Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trina Solar has no effect on the direction of Visa i.e., Visa and Trina Solar go up and down completely randomly.
Pair Corralation between Visa and Trina Solar
Taking into account the 90-day investment horizon Visa is expected to generate 1.62 times less return on investment than Trina Solar. But when comparing it to its historical volatility, Visa Class A is 4.74 times less risky than Trina Solar. It trades about 0.25 of its potential returns per unit of risk. Trina Solar Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,754 in Trina Solar Co on September 26, 2024 and sell it today you would earn a total of 361.00 from holding Trina Solar Co or generate 20.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Visa Class A vs. Trina Solar Co
Performance |
Timeline |
Visa Class A |
Trina Solar |
Visa and Trina Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and Trina Solar
The main advantage of trading using opposite Visa and Trina Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Trina Solar 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 Trina Solar will offset losses from the drop in Trina Solar's long position.Visa vs. American Express | ||
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Check out your portfolio center.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.
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