Correlation Between Vela International and Vela Large
Can any of the company-specific risk be diversified away by investing in both Vela International and Vela Large 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 Vela International and Vela Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vela International and Vela Large Cap, you can compare the effects of market volatilities on Vela International and Vela Large 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 Vela International with a short position of Vela Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vela International and Vela Large.
Diversification Opportunities for Vela International and Vela Large
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vela and Vela is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vela International and Vela Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela Large Cap and Vela International 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 Vela International are associated (or correlated) with Vela Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela Large Cap has no effect on the direction of Vela International i.e., Vela International and Vela Large go up and down completely randomly.
Pair Corralation between Vela International and Vela Large
Assuming the 90 days horizon Vela International is expected to generate 2.32 times less return on investment than Vela Large. In addition to that, Vela International is 1.32 times more volatile than Vela Large Cap. It trades about 0.04 of its total potential returns per unit of risk. Vela Large Cap is currently generating about 0.13 per unit of volatility. If you would invest 1,400 in Vela Large Cap on August 31, 2024 and sell it today you would earn a total of 415.00 from holding Vela Large Cap or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vela International vs. Vela Large Cap
Performance |
| Timeline |
| Vela International |
| Vela Large Cap |
Vela International and Vela Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vela International and Vela Large
The main advantage of trading using opposite Vela International and Vela Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vela International position performs unexpectedly, Vela Large 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 Vela Large will offset losses from the drop in Vela Large's long position.| Vela International vs. Allianzgi Convertible Income | Vela International vs. Fidelity Sai Convertible | Vela International vs. Harbor Vertible Securities | Vela International vs. Advent Claymore Convertible |
| Vela Large vs. Champlain Mid Cap | Vela Large vs. Kinetics Small Cap | Vela Large vs. Tfa Alphagen Growth | Vela Large vs. Artisan Small Cap |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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