Correlation Between Visa and Coinbase Global
Can any of the company-specific risk be diversified away by investing in both Visa and Coinbase Global 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 Coinbase Global 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 Coinbase Global, you can compare the effects of market volatilities on Visa and Coinbase Global 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 Coinbase Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Coinbase Global.
Diversification Opportunities for Visa and Coinbase Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Coinbase is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global 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 Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Visa i.e., Visa and Coinbase Global go up and down completely randomly.
Pair Corralation between Visa and Coinbase Global
Taking into account the 90-day investment horizon Visa is expected to generate 2.93 times less return on investment than Coinbase Global. But when comparing it to its historical volatility, Visa Class A is 4.35 times less risky than Coinbase Global. It trades about 0.14 of its potential returns per unit of risk. Coinbase Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 27,962 in Coinbase Global on October 25, 2024 and sell it today you would earn a total of 1,623 from holding Coinbase Global or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Coinbase Global
Performance |
| Timeline |
| Visa Class A |
| Coinbase Global |
Visa and Coinbase Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Coinbase Global
The main advantage of trading using opposite Visa and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Coinbase Global vs. Moodys | Coinbase Global vs. MSCI Inc | Coinbase Global vs. Intercontinental Exchange | Coinbase Global vs. CME Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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