Correlation Between Visa and Tscan Therapeutics

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

Diversification Opportunities for Visa and Tscan Therapeutics

-0.71

Correlation Coefficient

Visa  Tscan Therapeutics

Pay attention - limited upside

The 3 months correlation between Visa and Tscan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tscan Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tscan Therapeutics 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 Tscan Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tscan Therapeutics has no effect on the direction of Visa i.e., Visa and Tscan Therapeutics go up and down completely randomly.

Pair Corralation between Visa and Tscan Therapeutics

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.18 times more return on investment than Tscan Therapeutics. However, Visa Class A is 5.5 times less risky than Tscan Therapeutics. It trades about 0.21 of its potential returns per unit of risk. Tscan Therapeutics is currently generating about -0.28 per unit of risk. If you would invest  31,455  in Visa Class A on November 29, 2024 and sell it today you would earn a total of  3,608  from holding Visa Class A or generate 11.47% return on investment over 90 days.

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

Visa Class A  vs.  Tscan Therapeutics

Visa Class A

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Tscan Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tscan Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa and Tscan Therapeutics

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

The idea behind Visa Class A and Tscan Therapeutics 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.