Correlation Between Visa and Cipher Mining

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

Diversification Opportunities for Visa and Cipher Mining

0.82

Correlation Coefficient

Visa  Cipher Mining

Very poor diversification

The 3 months correlation between Visa and Cipher is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining 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 Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Visa i.e., Visa and Cipher Mining go up and down completely randomly.

Pair Corralation between Visa and Cipher Mining

Taking into account the 90-day investment horizon Visa is expected to generate 8.86 times less return on investment than Cipher Mining. But when comparing it to its historical volatility, Visa Class A is 8.35 times less risky than Cipher Mining. It trades about 0.17 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Cipher Mining on September 3, 2024 and sell it today you would earn a total of  122.00  from holding Cipher Mining or generate 140.23% return on investment over 90 days.

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

Visa Class A  vs.  Cipher Mining

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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.

Cipher Mining

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Cipher Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Cipher Mining

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

The idea behind Visa Class A and Cipher Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.