Correlation Between Global Technology and Vela Income
Can any of the company-specific risk be diversified away by investing in both Global Technology and Vela Income 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 Global Technology and Vela Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Vela Income Opportunities, you can compare the effects of market volatilities on Global Technology and Vela Income 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 Global Technology with a short position of Vela Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Vela Income.
Diversification Opportunities for Global Technology and Vela Income
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Vela is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Vela Income Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela Income Opportunities and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Vela Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela Income Opportunities has no effect on the direction of Global Technology i.e., Global Technology and Vela Income go up and down completely randomly.
Pair Corralation between Global Technology and Vela Income
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 2.48 times more return on investment than Vela Income. However, Global Technology is 2.48 times more volatile than Vela Income Opportunities. It trades about 0.07 of its potential returns per unit of risk. Vela Income Opportunities is currently generating about 0.12 per unit of risk. If you would invest 2,086 in Global Technology Portfolio on August 31, 2024 and sell it today you would earn a total of 36.00 from holding Global Technology Portfolio or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Technology Portfolio vs. Vela Income Opportunities
Performance |
| Timeline |
| Global Technology |
| Vela Income Opportunities |
Global Technology and Vela Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Vela Income
The main advantage of trading using opposite Global Technology and Vela Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Vela Income 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 Vela Income will offset losses from the drop in Vela Income's long position.| Global Technology vs. Black Oak Emerging | Global Technology vs. Angel Oak Multi Strategy | Global Technology vs. Investec Emerging Markets | Global Technology vs. Goldman Sachs Emerging |
| Vela Income vs. Global Technology Portfolio | Vela Income vs. Icon Information Technology | Vela Income vs. Hennessy Technology Fund | Vela Income vs. Science Technology Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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