Correlation Between Visa and FileCoin

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

Diversification Opportunities for Visa and FileCoin

0.61

Correlation Coefficient

Visa  FileCoin

Poor diversification

The 3 months correlation between Visa and FileCoin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FileCoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FileCoin 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 FileCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FileCoin has no effect on the direction of Visa i.e., Visa and FileCoin go up and down completely randomly.

Pair Corralation between Visa and FileCoin

Taking into account the 90-day investment horizon Visa is expected to generate 6.15 times less return on investment than FileCoin. But when comparing it to its historical volatility, Visa Class A is 3.79 times less risky than FileCoin. It trades about 0.16 of its potential returns per unit of risk. FileCoin is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  335.00  in FileCoin on September 1, 2024 and sell it today you would earn a total of  373.00  from holding FileCoin or generate 111.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Visa Class A  vs.  FileCoin

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

FileCoin

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FileCoin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, FileCoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and FileCoin

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

The idea behind Visa Class A and FileCoin 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.