Correlation Between Visa and Global Blockchain

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

Diversification Opportunities for Visa and Global Blockchain

0.5

Correlation Coefficient

Visa  Global Blockchain

Very weak diversification

The 3 months correlation between Visa and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Global Blockchain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blockchain 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 Global Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blockchain has no effect on the direction of Visa i.e., Visa and Global Blockchain go up and down completely randomly.

Pair Corralation between Visa and Global Blockchain

Taking into account the 90-day investment horizon Visa is expected to generate 7.78 times less return on investment than Global Blockchain. But when comparing it to its historical volatility, Visa Class A is 10.68 times less risky than Global Blockchain. It trades about 0.16 of its potential returns per unit of risk. Global Blockchain Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Global Blockchain Acquisition on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Global Blockchain Acquisition or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.95%
Values	Daily Returns

Visa Class A  vs.  Global Blockchain Acquisition

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Global Blockchain

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blockchain Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Global Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Global Blockchain

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

The idea behind Visa Class A and Global Blockchain Acquisition 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.