Correlation Between Hamilton Lane and Visa

Can any of the company-specific risk be diversified away by investing in both Hamilton Lane 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 Hamilton Lane and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hamilton Lane and Visa Class A, you can compare the effects of market volatilities on Hamilton Lane 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 Hamilton Lane with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Lane and Visa.

Diversification Opportunities for Hamilton Lane and Visa

-0.22

Correlation Coefficient

Hamilton Lane  Visa

Very good diversification

The 3 months correlation between Hamilton and Visa is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Lane 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 Hamilton Lane 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 Hamilton Lane 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 Hamilton Lane i.e., Hamilton Lane and Visa go up and down completely randomly.

Pair Corralation between Hamilton Lane and Visa

Given the investment horizon of 90 days Hamilton Lane is expected to under-perform the Visa. In addition to that, Hamilton Lane is 3.1 times more volatile than Visa Class A. It trades about -0.06 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.29 per unit of volatility. If you would invest  34,524  in Visa Class A on December 4, 2024 and sell it today you would earn a total of  1,658  from holding Visa Class A or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hamilton Lane  vs.  Visa Class A

Hamilton Lane

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hamilton Lane has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Lane and Visa

The main advantage of trading using opposite Hamilton Lane and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Lane 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.

The idea behind Hamilton Lane and Visa Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.