Correlation Between Avon Protection and Vitec Software
Can any of the company-specific risk be diversified away by investing in both Avon Protection and Vitec Software 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 Avon Protection and Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avon Protection PLC and Vitec Software Group, you can compare the effects of market volatilities on Avon Protection and Vitec Software 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 Avon Protection with a short position of Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avon Protection and Vitec Software.
Diversification Opportunities for Avon Protection and Vitec Software
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avon and Vitec is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Avon Protection PLC and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Avon Protection 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 Avon Protection PLC are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Avon Protection i.e., Avon Protection and Vitec Software go up and down completely randomly.
Pair Corralation between Avon Protection and Vitec Software
Assuming the 90 days trading horizon Avon Protection PLC is expected to generate 1.08 times more return on investment than Vitec Software. However, Avon Protection is 1.08 times more volatile than Vitec Software Group. It trades about 0.28 of its potential returns per unit of risk. Vitec Software Group is currently generating about 0.13 per unit of risk. If you would invest 122,600 in Avon Protection PLC on September 14, 2024 and sell it today you would earn a total of 15,400 from holding Avon Protection PLC or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avon Protection PLC vs. Vitec Software Group
Performance |
| Timeline |
| Avon Protection PLC |
| Vitec Software Group |
Avon Protection and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avon Protection and Vitec Software
The main advantage of trading using opposite Avon Protection and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avon Protection position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.| Avon Protection vs. Polar Capital Technology | Avon Protection vs. CVS Health Corp | Avon Protection vs. Spotify Technology SA | Avon Protection vs. MyHealthChecked Plc |
| Vitec Software vs. Intuitive Investments Group | Vitec Software vs. Livermore Investments Group | Vitec Software vs. Indutrade AB | Vitec Software vs. Fevertree Drinks Plc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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