Correlation Between Visa and MONA
Can any of the company-specific risk be diversified away by investing in both Visa and MONA 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 MONA 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 MONA, you can compare the effects of market volatilities on Visa and MONA 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 MONA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and MONA.
Diversification Opportunities for Visa and MONA
Very weak diversification
The 3 months correlation between Visa and MONA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MONA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONA 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 MONA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONA has no effect on the direction of Visa i.e., Visa and MONA go up and down completely randomly.
Pair Corralation between Visa and MONA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.28 times more return on investment than MONA. However, Visa Class A is 3.54 times less risky than MONA. It trades about 0.1 of its potential returns per unit of risk. MONA is currently generating about 0.01 per unit of risk. If you would invest 24,113 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 7,395 from holding Visa Class A or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 51.67% |
| Values | Daily Returns |
Visa Class A vs. MONA
Performance |
| Timeline |
| Visa Class A |
| MONA |
Visa and MONA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and MONA
The main advantage of trading using opposite Visa and MONA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, MONA 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 MONA will offset losses from the drop in MONA's long position.| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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