Correlation Between Visa and Magic Eden

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

Diversification Opportunities for Visa and Magic Eden

0.52

Correlation Coefficient

Visa  Magic Eden

Very weak diversification

The 3 months correlation between Visa and Magic is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Magic Eden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Eden 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 Magic Eden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Eden has no effect on the direction of Visa i.e., Visa and Magic Eden go up and down completely randomly.

Pair Corralation between Visa and Magic Eden

Taking into account the 90-day investment horizon Visa is expected to generate 272.86 times less return on investment than Magic Eden. But when comparing it to its historical volatility, Visa Class A is 185.32 times less risky than Magic Eden. It trades about 0.1 of its potential returns per unit of risk. Magic Eden is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Magic Eden on October 8, 2024 and sell it today you would earn a total of  334.92  from holding Magic Eden or generate 437236.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Magic Eden

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.

Magic Eden

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Eden are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Magic Eden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Magic Eden

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

The idea behind Visa Class A and Magic Eden 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..