Correlation Between Visa and Ladenburg Growth
Can any of the company-specific risk be diversified away by investing in both Visa and Ladenburg Growth 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 Ladenburg Growth 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 Ladenburg Growth, you can compare the effects of market volatilities on Visa and Ladenburg Growth 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 Ladenburg Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ladenburg Growth.
Diversification Opportunities for Visa and Ladenburg Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Ladenburg is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ladenburg Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Growth 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 Ladenburg Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Growth has no effect on the direction of Visa i.e., Visa and Ladenburg Growth go up and down completely randomly.
Pair Corralation between Visa and Ladenburg Growth
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.37 times more return on investment than Ladenburg Growth. However, Visa is 1.37 times more volatile than Ladenburg Growth. It trades about 0.08 of its potential returns per unit of risk. Ladenburg Growth is currently generating about 0.09 per unit of risk. If you would invest 21,128 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 10,380 from holding Visa Class A or generate 49.13% 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. Ladenburg Growth
Performance |
| Timeline |
| Visa Class A |
| Ladenburg Growth |
Visa and Ladenburg Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ladenburg Growth
The main advantage of trading using opposite Visa and Ladenburg Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ladenburg Growth 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 Ladenburg Growth will offset losses from the drop in Ladenburg Growth's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Ladenburg Growth vs. Western Asset Diversified | Ladenburg Growth vs. Aqr Diversified Arbitrage | Ladenburg Growth vs. Huber Capital Diversified | Ladenburg Growth vs. American Funds Conservative |
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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