Correlation Between Birks and VOXX International
Can any of the company-specific risk be diversified away by investing in both Birks and VOXX International 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 Birks and VOXX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and VOXX International, you can compare the effects of market volatilities on Birks and VOXX International 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 Birks with a short position of VOXX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and VOXX International.
Diversification Opportunities for Birks and VOXX International
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Birks and VOXX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International and Birks 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 Birks Group are associated (or correlated) with VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Birks i.e., Birks and VOXX International go up and down completely randomly.
Pair Corralation between Birks and VOXX International
Considering the 90-day investment horizon Birks Group is expected to under-perform the VOXX International. But the stock apears to be less risky and, when comparing its historical volatility, Birks Group is 1.4 times less risky than VOXX International. The stock trades about -0.04 of its potential returns per unit of risk. The VOXX International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 971.00 in VOXX International on August 27, 2024 and sell it today you would lose (227.00) from holding VOXX International or give up 23.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. VOXX International
Performance |
| Timeline |
| Birks Group |
| VOXX International |
Birks and VOXX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and VOXX International
The main advantage of trading using opposite Birks and VOXX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, VOXX International 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 VOXX International will offset losses from the drop in VOXX International's long position.The idea behind Birks Group and VOXX International 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.| VOXX International vs. LG Display Co | VOXX International vs. Vizio Holding Corp | VOXX International vs. Turtle Beach Corp | VOXX International vs. Emerson Radio |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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