Correlation Between Houlihan Lokey and Visa
Can any of the company-specific risk be diversified away by investing in both Houlihan Lokey 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 Houlihan Lokey and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houlihan Lokey and Visa Class A, you can compare the effects of market volatilities on Houlihan Lokey 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 Houlihan Lokey with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Visa.
Diversification Opportunities for Houlihan Lokey and Visa
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Houlihan and Visa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey 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 Houlihan Lokey 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 Houlihan Lokey 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 Houlihan Lokey i.e., Houlihan Lokey and Visa go up and down completely randomly.
Pair Corralation between Houlihan Lokey and Visa
Considering the 90-day investment horizon Houlihan Lokey is expected to generate 1.99 times more return on investment than Visa. However, Houlihan Lokey is 1.99 times more volatile than Visa Class A. It trades about 0.23 of its potential returns per unit of risk. Visa Class A is currently generating about 0.36 per unit of risk. If you would invest 16,811 in Houlihan Lokey on August 28, 2024 and sell it today you would earn a total of 2,238 from holding Houlihan Lokey or generate 13.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Houlihan Lokey vs. Visa Class A
Performance |
| Timeline |
| Houlihan Lokey |
| Visa Class A |
Houlihan Lokey and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houlihan Lokey and Visa
The main advantage of trading using opposite Houlihan Lokey and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houlihan Lokey 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.| Houlihan Lokey vs. Visa Class A | Houlihan Lokey vs. Diamond Hill Investment | Houlihan Lokey vs. Distoken Acquisition | Houlihan Lokey vs. AllianceBernstein Holding LP |
| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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