Correlation Between Sony Corp and Vuzix Corp
Can any of the company-specific risk be diversified away by investing in both Sony Corp and Vuzix Corp 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 Sony Corp and Vuzix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Corp and Vuzix Corp Cmn, you can compare the effects of market volatilities on Sony Corp and Vuzix Corp 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 Sony Corp with a short position of Vuzix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Corp and Vuzix Corp.
Diversification Opportunities for Sony Corp and Vuzix Corp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sony and Vuzix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn and Sony Corp 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 Sony Corp are associated (or correlated) with Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of Sony Corp i.e., Sony Corp and Vuzix Corp go up and down completely randomly.
Pair Corralation between Sony Corp and Vuzix Corp
Assuming the 90 days horizon Sony Corp is expected to generate 0.21 times more return on investment than Vuzix Corp. However, Sony Corp is 4.78 times less risky than Vuzix Corp. It trades about -0.05 of its potential returns per unit of risk. Vuzix Corp Cmn is currently generating about -0.12 per unit of risk. If you would invest 2,112 in Sony Corp on October 22, 2024 and sell it today you would lose (63.00) from holding Sony Corp or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Corp vs. Vuzix Corp Cmn
Performance |
| Timeline |
| Sony Corp |
| Vuzix Corp Cmn |
Sony Corp and Vuzix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Corp and Vuzix Corp
The main advantage of trading using opposite Sony Corp and Vuzix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Corp position performs unexpectedly, Vuzix Corp 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 Vuzix Corp will offset losses from the drop in Vuzix Corp's long position.| Sony Corp vs. LG Display Co | Sony Corp vs. Sonos Inc | Sony Corp vs. TCL Electronics Holdings | Sony Corp vs. Sharp Corp ADR |
| Vuzix Corp vs. LG Display Co | Vuzix Corp vs. Universal Electronics | Vuzix Corp vs. VOXX International | Vuzix Corp vs. Sonos Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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