Correlation Between National Presto and VSE
Can any of the company-specific risk be diversified away by investing in both National Presto and VSE 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 National Presto and VSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Presto Industries and VSE Corporation, you can compare the effects of market volatilities on National Presto and VSE 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 National Presto with a short position of VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Presto and VSE.
Diversification Opportunities for National Presto and VSE
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and VSE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation and National Presto 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 National Presto Industries are associated (or correlated) with VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of National Presto i.e., National Presto and VSE go up and down completely randomly.
Pair Corralation between National Presto and VSE
Considering the 90-day investment horizon National Presto Industries is expected to under-perform the VSE. But the stock apears to be less risky and, when comparing its historical volatility, National Presto Industries is 2.04 times less risky than VSE. The stock trades about -0.02 of its potential returns per unit of risk. The VSE Corporation is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9,282 in VSE Corporation on November 3, 2024 and sell it today you would earn a total of 953.00 from holding VSE Corporation or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Presto Industries vs. VSE Corp.
Performance |
| Timeline |
| National Presto Indu |
| VSE Corporation |
National Presto and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Presto and VSE
The main advantage of trading using opposite National Presto and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Presto position performs unexpectedly, VSE 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 VSE will offset losses from the drop in VSE's long position.| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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