Correlation Between Ree Automotive and VF
Can any of the company-specific risk be diversified away by investing in both Ree Automotive and VF 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 Ree Automotive and VF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ree Automotive Holding and VF Corporation, you can compare the effects of market volatilities on Ree Automotive and VF 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 Ree Automotive with a short position of VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ree Automotive and VF.
Diversification Opportunities for Ree Automotive and VF
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ree and VF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ree Automotive Holding and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation and Ree Automotive 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 Ree Automotive Holding are associated (or correlated) with VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Ree Automotive i.e., Ree Automotive and VF go up and down completely randomly.
Pair Corralation between Ree Automotive and VF
Considering the 90-day investment horizon Ree Automotive Holding is expected to generate 1.75 times more return on investment than VF. However, Ree Automotive is 1.75 times more volatile than VF Corporation. It trades about 0.05 of its potential returns per unit of risk. VF Corporation is currently generating about 0.05 per unit of risk. If you would invest 600.00 in Ree Automotive Holding on September 1, 2024 and sell it today you would earn a total of 173.00 from holding Ree Automotive Holding or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ree Automotive Holding vs. VF Corp.
Performance |
| Timeline |
| Ree Automotive Holding |
| VF Corporation |
Ree Automotive and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ree Automotive and VF
The main advantage of trading using opposite Ree Automotive and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ree Automotive position performs unexpectedly, VF 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 VF will offset losses from the drop in VF's long position.| Ree Automotive vs. Twin Vee Powercats | Ree Automotive vs. LCI Industries | Ree Automotive vs. Curtiss Motorcycles | Ree Automotive vs. Marine Products |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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