Correlation Between Visa and Hamilton Lane

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

Diversification Opportunities for Visa and Hamilton Lane

0.66

Correlation Coefficient

Visa  Hamilton Lane

Poor diversification

The 3 months correlation between Visa and Hamilton is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hamilton Lane in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Lane 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 Hamilton Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Lane has no effect on the direction of Visa i.e., Visa and Hamilton Lane go up and down completely randomly.

Pair Corralation between Visa and Hamilton Lane

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.53 times more return on investment than Hamilton Lane. However, Visa Class A is 1.88 times less risky than Hamilton Lane. It trades about 0.14 of its potential returns per unit of risk. Hamilton Lane is currently generating about -0.44 per unit of risk. If you would invest  30,825  in Visa Class A on September 15, 2024 and sell it today you would earn a total of  649.00  from holding Visa Class A or generate 2.11% 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.  Hamilton Lane

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hamilton Lane

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Lane are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Hamilton Lane may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Hamilton Lane

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

The idea behind Visa Class A and Hamilton Lane 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.