Correlation Between Visa and Bakkt Holdings
Can any of the company-specific risk be diversified away by investing in both Visa and Bakkt Holdings 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 Bakkt Holdings 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 Bakkt Holdings, you can compare the effects of market volatilities on Visa and Bakkt Holdings 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 Bakkt Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bakkt Holdings.
Diversification Opportunities for Visa and Bakkt Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Bakkt is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings 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 Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of Visa i.e., Visa and Bakkt Holdings go up and down completely randomly.
Pair Corralation between Visa and Bakkt Holdings
Taking into account the 90-day investment horizon Visa is expected to generate 9.5 times less return on investment than Bakkt Holdings. But when comparing it to its historical volatility, Visa Class A is 16.41 times less risky than Bakkt Holdings. It trades about 0.19 of its potential returns per unit of risk. Bakkt Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,337 in Bakkt Holdings on August 28, 2024 and sell it today you would earn a total of 1,464 from holding Bakkt Holdings or generate 109.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Bakkt Holdings
Performance |
| Timeline |
| Visa Class A |
| Bakkt Holdings |
Visa and Bakkt Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bakkt Holdings
The main advantage of trading using opposite Visa and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bakkt Holdings 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 Bakkt Holdings will offset losses from the drop in Bakkt Holdings' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Bakkt Holdings vs. Arqit Quantum | Bakkt Holdings vs. Alarum Technologies | Bakkt Holdings vs. Edgio Inc | Bakkt Holdings vs. GigaCloud Technology Class |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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