Correlation Between VF and NATION MEDIA
Can any of the company-specific risk be diversified away by investing in both VF and NATION MEDIA 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 VF and NATION MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VF Corporation and NATION MEDIA GROUP, you can compare the effects of market volatilities on VF and NATION MEDIA 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 VF with a short position of NATION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF and NATION MEDIA.
Diversification Opportunities for VF and NATION MEDIA
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between VF and NATION is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and NATION MEDIA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATION MEDIA GROUP and VF 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 VF Corporation are associated (or correlated) with NATION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATION MEDIA GROUP has no effect on the direction of VF i.e., VF and NATION MEDIA go up and down completely randomly.
Pair Corralation between VF and NATION MEDIA
Considering the 90-day investment horizon VF is expected to generate 1.63 times less return on investment than NATION MEDIA. In addition to that, VF is 1.27 times more volatile than NATION MEDIA GROUP. It trades about 0.01 of its total potential returns per unit of risk. NATION MEDIA GROUP is currently generating about 0.02 per unit of volatility. If you would invest 27,000 in NATION MEDIA GROUP on December 11, 2024 and sell it today you would earn a total of 3,000 from holding NATION MEDIA GROUP or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.58% |
| Values | Daily Returns |
VF Corp. vs. NATION MEDIA GROUP
Performance |
| Timeline |
| VF Corporation |
| NATION MEDIA GROUP |
VF and NATION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VF and NATION MEDIA
The main advantage of trading using opposite VF and NATION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF position performs unexpectedly, NATION MEDIA 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 NATION MEDIA will offset losses from the drop in NATION MEDIA's long position.The idea behind VF Corporation and NATION MEDIA GROUP 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.| NATION MEDIA vs. EAST AFRICAN BREWERIES | ||
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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