Correlation Between Visa and BTC Digital

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

Diversification Opportunities for Visa and BTC Digital

-0.13

Correlation Coefficient

Visa  BTC Digital

Good diversification

The 3 months correlation between Visa and BTC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital 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 BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Visa i.e., Visa and BTC Digital go up and down completely randomly.

Pair Corralation between Visa and BTC Digital

Taking into account the 90-day investment horizon Visa is expected to generate 3.21 times less return on investment than BTC Digital. But when comparing it to its historical volatility, Visa Class A is 10.81 times less risky than BTC Digital. It trades about 0.12 of its potential returns per unit of risk. BTC Digital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  511.00  in BTC Digital on December 25, 2024 and sell it today you would lose (47.00) from holding BTC Digital or give up 9.2% of portfolio value over 90 days.

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

Visa Class A  vs.  BTC Digital

Visa Class A

Risk-Adjusted Performance

Modest

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.

BTC Digital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, BTC Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and BTC Digital

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

The idea behind Visa Class A and BTC Digital 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..