Correlation Between Visa and Ladenburg Thalmann
Can any of the company-specific risk be diversified away by investing in both Visa and Ladenburg Thalmann 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 Thalmann 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 Thalmann Financial, you can compare the effects of market volatilities on Visa and Ladenburg Thalmann 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 Thalmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ladenburg Thalmann.
Diversification Opportunities for Visa and Ladenburg Thalmann
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Ladenburg is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ladenburg Thalmann Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Thalmann 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 Thalmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Thalmann has no effect on the direction of Visa i.e., Visa and Ladenburg Thalmann go up and down completely randomly.
Pair Corralation between Visa and Ladenburg Thalmann
Taking into account the 90-day investment horizon Visa is expected to generate 1.57 times less return on investment than Ladenburg Thalmann. But when comparing it to its historical volatility, Visa Class A is 2.0 times less risky than Ladenburg Thalmann. It trades about 0.09 of its potential returns per unit of risk. Ladenburg Thalmann Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Ladenburg Thalmann Financial on September 13, 2024 and sell it today you would earn a total of 585.00 from holding Ladenburg Thalmann Financial or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Visa Class A vs. Ladenburg Thalmann Financial
Performance |
| Timeline |
| Visa Class A |
| Ladenburg Thalmann |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Ladenburg Thalmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ladenburg Thalmann
The main advantage of trading using opposite Visa and Ladenburg Thalmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Ladenburg Thalmann 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 Thalmann will offset losses from the drop in Ladenburg Thalmann'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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