Correlation Between Peloton Interactive and Vista Outdoor
Can any of the company-specific risk be diversified away by investing in both Peloton Interactive and Vista Outdoor 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 Peloton Interactive and Vista Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Interactive and Vista Outdoor, you can compare the effects of market volatilities on Peloton Interactive and Vista Outdoor 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 Peloton Interactive with a short position of Vista Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Interactive and Vista Outdoor.
Diversification Opportunities for Peloton Interactive and Vista Outdoor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peloton and Vista is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor and Peloton Interactive 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 Peloton Interactive are associated (or correlated) with Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Peloton Interactive i.e., Peloton Interactive and Vista Outdoor go up and down completely randomly.
Pair Corralation between Peloton Interactive and Vista Outdoor
Given the investment horizon of 90 days Peloton Interactive is expected to generate 38.17 times more return on investment than Vista Outdoor. However, Peloton Interactive is 38.17 times more volatile than Vista Outdoor. It trades about 0.28 of its potential returns per unit of risk. Vista Outdoor is currently generating about 0.25 per unit of risk. If you would invest 640.00 in Peloton Interactive on August 28, 2024 and sell it today you would earn a total of 318.00 from holding Peloton Interactive or generate 49.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peloton Interactive vs. Vista Outdoor
Performance |
| Timeline |
| Peloton Interactive |
| Vista Outdoor |
Peloton Interactive and Vista Outdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peloton Interactive and Vista Outdoor
The main advantage of trading using opposite Peloton Interactive and Vista Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Interactive position performs unexpectedly, Vista Outdoor 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 Vista Outdoor will offset losses from the drop in Vista Outdoor's long position.| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
| Vista Outdoor vs. Clarus Corp | Vista Outdoor vs. Johnson Outdoors | Vista Outdoor vs. Escalade Incorporated | Vista Outdoor vs. JAKKS Pacific |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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