Correlation Between Global Standard and VAIV
Can any of the company-specific risk be diversified away by investing in both Global Standard and VAIV 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 Global Standard and VAIV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and VAIV Co, you can compare the effects of market volatilities on Global Standard and VAIV 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 Global Standard with a short position of VAIV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and VAIV.
Diversification Opportunities for Global Standard and VAIV
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and VAIV is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and VAIV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAIV and Global Standard 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 Global Standard Technology are associated (or correlated) with VAIV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAIV has no effect on the direction of Global Standard i.e., Global Standard and VAIV go up and down completely randomly.
Pair Corralation between Global Standard and VAIV
Assuming the 90 days trading horizon Global Standard Technology is expected to under-perform the VAIV. In addition to that, Global Standard is 1.05 times more volatile than VAIV Co. It trades about -0.08 of its total potential returns per unit of risk. VAIV Co is currently generating about -0.07 per unit of volatility. If you would invest 608,000 in VAIV Co on August 31, 2024 and sell it today you would lose (192,500) from holding VAIV Co or give up 31.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. VAIV Co
Performance |
| Timeline |
| Global Standard Tech |
| VAIV |
Global Standard and VAIV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and VAIV
The main advantage of trading using opposite Global Standard and VAIV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, VAIV 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 VAIV will offset losses from the drop in VAIV's long position.| Global Standard vs. Dongsin Engineering Construction | Global Standard vs. Doosan Fuel Cell | Global Standard vs. Daishin Balance 1 | Global Standard vs. Total Soft Bank |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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