Correlation Between Legato Merger and Visa
Can any of the company-specific risk be diversified away by investing in both Legato Merger 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 Legato Merger and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legato Merger Corp and Visa Class A, you can compare the effects of market volatilities on Legato Merger 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 Legato Merger with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legato Merger and Visa.
Diversification Opportunities for Legato Merger and Visa
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legato and Visa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Legato Merger Corp 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 Legato Merger 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 Legato Merger Corp 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 Legato Merger i.e., Legato Merger and Visa go up and down completely randomly.
Pair Corralation between Legato Merger and Visa
Given the investment horizon of 90 days Legato Merger is expected to generate 25.33 times less return on investment than Visa. But when comparing it to its historical volatility, Legato Merger Corp is 15.47 times less risky than Visa. It trades about 0.21 of its potential returns per unit of risk. Visa Class A is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 28,119 in Visa Class A on August 26, 2024 and sell it today you would earn a total of 2,873 from holding Visa Class A or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legato Merger Corp vs. Visa Class A
Performance |
| Timeline |
| Legato Merger Corp |
| Visa Class A |
Legato Merger and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legato Merger and Visa
The main advantage of trading using opposite Legato Merger and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legato Merger 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.| Legato Merger vs. Visa Class A | Legato Merger vs. Diamond Hill Investment | Legato Merger vs. Distoken Acquisition | Legato Merger 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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