Correlation Between Visa and Bitcoin ETF
Can any of the company-specific risk be diversified away by investing in both Visa and Bitcoin ETF 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 ETF 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 Bitcoin ETF CAD, you can compare the effects of market volatilities on Visa and Bitcoin ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bitcoin ETF.
Diversification Opportunities for Visa and Bitcoin ETF
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Visa and Bitcoin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD 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 Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of Visa i.e., Visa and Bitcoin ETF go up and down completely randomly.
Pair Corralation between Visa and Bitcoin ETF
Taking into account the 90-day investment horizon Visa is expected to generate 3.94 times less return on investment than Bitcoin ETF. But when comparing it to its historical volatility, Visa Class A is 3.68 times less risky than Bitcoin ETF. It trades about 0.35 of its potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,482 in Bitcoin ETF CAD on September 1, 2024 and sell it today you would earn a total of 1,398 from holding Bitcoin ETF CAD or generate 40.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Bitcoin ETF CAD
Performance |
| Timeline |
| Visa Class A |
| Bitcoin ETF CAD |
Visa and Bitcoin ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bitcoin ETF
The main advantage of trading using opposite Visa and Bitcoin ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bitcoin ETF 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 ETF will offset losses from the drop in Bitcoin ETF's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Bitcoin ETF vs. 3iQ Bitcoin ETF | Bitcoin ETF vs. 3iQ CoinShares Ether | Bitcoin ETF vs. Forstrong Global Income | Bitcoin ETF vs. BMO Aggregate Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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