Correlation Between Sturm Ruger and VSE
Can any of the company-specific risk be diversified away by investing in both Sturm Ruger 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 Sturm Ruger and VSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sturm Ruger and VSE Corporation, you can compare the effects of market volatilities on Sturm Ruger 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 Sturm Ruger with a short position of VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sturm Ruger and VSE.
Diversification Opportunities for Sturm Ruger and VSE
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sturm and VSE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation and Sturm Ruger 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 Sturm Ruger 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 Sturm Ruger i.e., Sturm Ruger and VSE go up and down completely randomly.
Pair Corralation between Sturm Ruger and VSE
Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the VSE. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 1.75 times less risky than VSE. The stock trades about -0.14 of its potential returns per unit of risk. The VSE Corporation is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,323 in VSE Corporation on September 2, 2024 and sell it today you would earn a total of 1,403 from holding VSE Corporation or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sturm Ruger vs. VSE Corp.
Performance |
| Timeline |
| Sturm Ruger |
| VSE Corporation |
Sturm Ruger and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sturm Ruger and VSE
The main advantage of trading using opposite Sturm Ruger and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sturm Ruger 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.| Sturm Ruger vs. Ammo Inc | Sturm Ruger vs. Kratos Defense Security | Sturm Ruger vs. VSE Corporation | Sturm Ruger vs. Ammo Preferred |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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