Correlation Between Visa and Bitcoin SV

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Can any of the company-specific risk be diversified away by investing in both Visa and Bitcoin SV 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 Bitcoin SV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc and Bitcoin SV, you can compare the effects of market volatilities on Visa and Bitcoin SV 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 Bitcoin SV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bitcoin SV.

Diversification Opportunities for Visa and Bitcoin SV

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Visa and Bitcoin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV 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 Inc are associated (or correlated) with Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of Visa i.e., Visa and Bitcoin SV go up and down completely randomly.

Pair Corralation between Visa and Bitcoin SV

Taking into account the 90-day investment horizon Visa is expected to generate 5.27 times less return on investment than Bitcoin SV. But when comparing it to its historical volatility, Visa Inc is 2.75 times less risky than Bitcoin SV. It trades about 0.12 of its potential returns per unit of risk. Bitcoin SV is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,183  in Bitcoin SV on May 13, 2022 and sell it today you would earn a total of  1,017  from holding Bitcoin SV or generate 19.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Visa Inc  vs.  Bitcoin SV

 Performance (%) 
       Timeline  
Visa Inc 
Visa Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 4 (%) 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 September 2022.

Visa Price Channel

Bitcoin SV 
Bitcoin Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bitcoin SV sustained solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Price Channel

Visa and Bitcoin SV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Bitcoin SV

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

Bitcoin SV

Pair trading matchups for Bitcoin SV

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Bitcoin SV as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Bitcoin SV's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Bitcoin SV's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Bitcoin SV.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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