Correlation Between AYRO and Vicinity
Can any of the company-specific risk be diversified away by investing in both AYRO and Vicinity 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 AYRO and Vicinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AYRO Inc and Vicinity Motor Corp, you can compare the effects of market volatilities on AYRO and Vicinity 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 AYRO with a short position of Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of AYRO and Vicinity.
Diversification Opportunities for AYRO and Vicinity
Poor diversification
The 3 months correlation between AYRO and Vicinity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AYRO Inc and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp and AYRO 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 AYRO Inc are associated (or correlated) with Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of AYRO i.e., AYRO and Vicinity go up and down completely randomly.
Pair Corralation between AYRO and Vicinity
Given the investment horizon of 90 days AYRO Inc is expected to generate 0.16 times more return on investment than Vicinity. However, AYRO Inc is 6.11 times less risky than Vicinity. It trades about -0.08 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.1 per unit of risk. If you would invest 114.00 in AYRO Inc on August 24, 2024 and sell it today you would lose (39.00) from holding AYRO Inc or give up 34.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AYRO Inc vs. Vicinity Motor Corp
Performance |
| Timeline |
| AYRO Inc |
| Vicinity Motor Corp |
AYRO and Vicinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AYRO and Vicinity
The main advantage of trading using opposite AYRO and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AYRO position performs unexpectedly, Vicinity 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 Vicinity will offset losses from the drop in Vicinity's long position.The idea behind AYRO Inc and Vicinity Motor Corp 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.| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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