Correlation Between Salient Alternative and VivoPower International
Can any of the company-specific risk be diversified away by investing in both Salient Alternative and VivoPower International 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 Salient Alternative and VivoPower International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Alternative Beta and VivoPower International PLC, you can compare the effects of market volatilities on Salient Alternative and VivoPower International 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 Salient Alternative with a short position of VivoPower International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Alternative and VivoPower International.
Diversification Opportunities for Salient Alternative and VivoPower International
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Salient and VivoPower is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Salient Alternative Beta and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and Salient Alternative 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 Salient Alternative Beta are associated (or correlated) with VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Salient Alternative i.e., Salient Alternative and VivoPower International go up and down completely randomly.
Pair Corralation between Salient Alternative and VivoPower International
Assuming the 90 days horizon Salient Alternative is expected to generate 16.52 times less return on investment than VivoPower International. But when comparing it to its historical volatility, Salient Alternative Beta is 28.39 times less risky than VivoPower International. It trades about 0.29 of its potential returns per unit of risk. VivoPower International PLC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 84.00 in VivoPower International PLC on September 3, 2024 and sell it today you would earn a total of 34.00 from holding VivoPower International PLC or generate 40.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Alternative Beta vs. VivoPower International PLC
Performance |
| Timeline |
| Salient Alternative Beta |
| VivoPower International |
Salient Alternative and VivoPower International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Alternative and VivoPower International
The main advantage of trading using opposite Salient Alternative and VivoPower International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Alternative position performs unexpectedly, VivoPower International 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 VivoPower International will offset losses from the drop in VivoPower International's long position.The idea behind Salient Alternative Beta and VivoPower International PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| VivoPower International vs. Emeren Group | VivoPower International vs. Tigo Energy | VivoPower International vs. Sunrun Inc | VivoPower International vs. Sunnova Energy International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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