Correlation Between Austal and VSE
Can any of the company-specific risk be diversified away by investing in both Austal and VSE 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 Austal and VSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austal Limited and VSE Corporation, you can compare the effects of market volatilities on Austal and VSE 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 Austal with a short position of VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austal and VSE.
Diversification Opportunities for Austal and VSE
Very weak diversification
The 3 months correlation between Austal and VSE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Austal Limited and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation and Austal 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 Austal Limited are associated (or correlated) with VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of Austal i.e., Austal and VSE go up and down completely randomly.
Pair Corralation between Austal and VSE
Assuming the 90 days horizon Austal Limited is expected to generate 1.89 times more return on investment than VSE. However, Austal is 1.89 times more volatile than VSE Corporation. It trades about 0.06 of its potential returns per unit of risk. VSE Corporation is currently generating about 0.11 per unit of risk. If you would invest 111.00 in Austal Limited on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Austal Limited or generate 85.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
Austal Limited vs. VSE Corp.
Performance |
| Timeline |
| Austal Limited |
| VSE Corporation |
Austal and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austal and VSE
The main advantage of trading using opposite Austal and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austal position performs unexpectedly, VSE 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 VSE will offset losses from the drop in VSE's long position.| Austal vs. 808 Renewable Energy | Austal vs. Sky Harbour Group | Austal vs. VirTra Inc | Austal vs. Firan Technology Group |
| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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