Correlation Between Visa and TCT

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

Diversification Opportunities for Visa and TCT

-0.7

Correlation Coefficient

Visa  TCT

Excellent diversification

The 3 months correlation between Visa and TCT is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and TCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCT 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 TCT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCT has no effect on the direction of Visa i.e., Visa and TCT go up and down completely randomly.

Pair Corralation between Visa and TCT

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.12 times more return on investment than TCT. However, Visa Class A is 8.38 times less risky than TCT. It trades about 0.12 of its potential returns per unit of risk. TCT is currently generating about -0.04 per unit of risk. If you would invest  32,037  in Visa Class A on December 26, 2024 and sell it today you would earn a total of  2,425  from holding Visa Class A or generate 7.57% return on investment over 90 days.

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

Visa Class A  vs.  TCT

Visa Class A

Risk-Adjusted Performance

OK

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.

TCT

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for TCT shareholders.

Pair Trading with Visa and TCT

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

The idea behind Visa Class A and TCT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.