Correlation Between Visa and Henderson Land

Can any of the company-specific risk be diversified away by investing in both Visa and Henderson Land 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 Henderson Land 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 Henderson Land, you can compare the effects of market volatilities on Visa and Henderson Land 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 Henderson Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Henderson Land.

Diversification Opportunities for Visa and Henderson Land

0.0

Correlation Coefficient

Visa  Henderson Land

Pay attention - limited upside

The 3 months correlation between Visa and Henderson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Henderson Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land 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 Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land has no effect on the direction of Visa i.e., Visa and Henderson Land go up and down completely randomly.

Pair Corralation between Visa and Henderson Land

If you would invest  31,455  in Visa Class A on November 29, 2024 and sell it today you would earn a total of  4,128  from holding Visa Class A or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Henderson Land

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 18 (%) 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.

Henderson Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Henderson Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Henderson Land is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Henderson Land

The main advantage of trading using opposite Visa and Henderson Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Henderson Land 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 Henderson Land will offset losses from the drop in Henderson Land's long position.

The idea behind Visa Class A and Henderson Land 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.