Correlation Between Visa and Tidal Trust

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

Diversification Opportunities for Visa and Tidal Trust

-0.47

Correlation Coefficient

Visa  Tidal Trust

Very good diversification

The 3 months correlation between Visa and Tidal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Visa i.e., Visa and Tidal Trust go up and down completely randomly.

Pair Corralation between Visa and Tidal Trust

Taking into account the 90-day investment horizon Visa is expected to generate 6.78 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, Visa Class A is 11.96 times less risky than Tidal Trust. It trades about 0.17 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Tidal Trust II on August 30, 2024 and sell it today you would earn a total of  1,045  from holding Tidal Trust II or generate 52.25% return on investment over 90 days.

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

Visa Class A  vs.  Tidal Trust II

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.

Tidal Trust II

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak fundamental indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Tidal Trust

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

The idea behind Visa Class A and Tidal Trust II 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.