Correlation Between Vela Large and Dana Large
Can any of the company-specific risk be diversified away by investing in both Vela Large and Dana 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 Large and Dana Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vela Large Cap and Dana Large Cap, you can compare the effects of market volatilities on Vela Large and Dana 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 Large with a short position of Dana Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vela Large and Dana Large.
Diversification Opportunities for Vela Large and Dana Large
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VELA and Dana is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vela Large Cap and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap and Vela Large 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 Large Cap are associated (or correlated) with Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Vela Large i.e., Vela Large and Dana Large go up and down completely randomly.
Pair Corralation between Vela Large and Dana Large
Assuming the 90 days horizon Vela Large is expected to generate 1.54 times less return on investment than Dana Large. But when comparing it to its historical volatility, Vela Large Cap is 1.45 times less risky than Dana Large. It trades about 0.32 of its potential returns per unit of risk. Dana Large Cap is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,563 in Dana Large Cap on September 4, 2024 and sell it today you would earn a total of 150.00 from holding Dana Large Cap or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vela Large Cap vs. Dana Large Cap
Performance |
| Timeline |
| Vela Large Cap |
| Dana Large Cap |
Vela Large and Dana Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vela Large and Dana Large
The main advantage of trading using opposite Vela Large and Dana Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vela Large position performs unexpectedly, Dana 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 Dana Large will offset losses from the drop in Dana Large's long position.| Vela Large vs. Vanguard Equity Income | Vela Large vs. Franklin Pennsylvania Tax Free | Vela Large vs. Invesco High Yield | Vela Large vs. Small Cap Equity |
| Dana Large vs. Nationwide Global Equity | Dana Large vs. Principal Lifetime Hybrid | Dana Large vs. Growth Strategy Fund | Dana Large vs. Semiconductor Ultrasector Profund |
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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