Correlation Between Trinity Capital and Visa
Can any of the company-specific risk be diversified away by investing in both Trinity Capital and Visa 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 Trinity Capital and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trinity Capital and Visa Class A, you can compare the effects of market volatilities on Trinity Capital and Visa 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 Trinity Capital with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinity Capital and Visa.
Diversification Opportunities for Trinity Capital and Visa
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trinity and Visa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Capital and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Trinity Capital 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 Trinity Capital are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Trinity Capital i.e., Trinity Capital and Visa go up and down completely randomly.
Pair Corralation between Trinity Capital and Visa
Given the investment horizon of 90 days Trinity Capital is expected to generate 1.44 times more return on investment than Visa. However, Trinity Capital is 1.44 times more volatile than Visa Class A. It trades about 0.29 of its potential returns per unit of risk. Visa Class A is currently generating about 0.4 per unit of risk. If you would invest 1,430 in Trinity Capital on November 30, 2024 and sell it today you would earn a total of 226.00 from holding Trinity Capital or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trinity Capital vs. Visa Class A
Performance |
| Timeline |
| Trinity Capital |
| Visa Class A |
Trinity Capital and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trinity Capital and Visa
The main advantage of trading using opposite Trinity Capital and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinity Capital position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| Trinity Capital vs. Carlyle Secured Lending | Trinity Capital vs. Sixth Street Specialty | Trinity Capital vs. Hercules Capital | Trinity Capital vs. BlackRock TCP Capital |
| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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