Correlation Between SPACE and Valens
Can any of the company-specific risk be diversified away by investing in both SPACE and Valens 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 SPACE and Valens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Valens, you can compare the effects of market volatilities on SPACE and Valens 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 SPACE with a short position of Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Valens.
Diversification Opportunities for SPACE and Valens
Very good diversification
The 3 months correlation between SPACE and Valens is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and SPACE 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 SPACE are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of SPACE i.e., SPACE and Valens go up and down completely randomly.
Pair Corralation between SPACE and Valens
Assuming the 90 days horizon SPACE is expected to under-perform the Valens. In addition to that, SPACE is 1.47 times more volatile than Valens. It trades about 0.0 of its total potential returns per unit of risk. Valens is currently generating about 0.01 per unit of volatility. If you would invest 218.00 in Valens on September 1, 2024 and sell it today you would lose (21.00) from holding Valens or give up 9.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.28% |
| Values | Daily Returns |
SPACE vs. Valens
Performance |
| Timeline |
| SPACE |
| Valens |
SPACE and Valens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Valens
The main advantage of trading using opposite SPACE and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.The idea behind SPACE and Valens 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.| Valens vs. Wolfspeed | Valens vs. GSI Technology | Valens vs. Lattice Semiconductor | Valens vs. ON Semiconductor |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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