Correlation Between Visa and Landcadia Holdings

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

Diversification Opportunities for Visa and Landcadia Holdings

0.0

Correlation Coefficient

Visa  Landcadia Holdings

Pay attention - limited upside

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

Pair Corralation between Visa and Landcadia Holdings

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.93 times more return on investment than Landcadia Holdings. However, Visa is 1.93 times more volatile than Landcadia Holdings II. It trades about 0.08 of its potential returns per unit of risk. Landcadia Holdings II is currently generating about 0.03 per unit of risk. If you would invest  21,956  in Visa Class A on October 7, 2024 and sell it today you would earn a total of  9,535  from holding Visa Class A or generate 43.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.21%
Values	Daily Returns

Visa Class A  vs.  Landcadia Holdings II

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Landcadia Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landcadia Holdings II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Landcadia Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Landcadia Holdings

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

The idea behind Visa Class A and Landcadia Holdings II 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.