Correlation Between VF and Ree Automotive
Can any of the company-specific risk be diversified away by investing in both VF and Ree Automotive 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 Ree Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VF Corporation and Ree Automotive Holding, you can compare the effects of market volatilities on VF and Ree Automotive 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 Ree Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF and Ree Automotive.
Diversification Opportunities for VF and Ree Automotive
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VF and Ree is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding 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 Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of VF i.e., VF and Ree Automotive go up and down completely randomly.
Pair Corralation between VF and Ree Automotive
Considering the 90-day investment horizon VF Corporation is expected to generate 1.33 times more return on investment than Ree Automotive. However, VF is 1.33 times more volatile than Ree Automotive Holding. It trades about 0.16 of its potential returns per unit of risk. Ree Automotive Holding is currently generating about 0.02 per unit of risk. If you would invest 1,703 in VF Corporation on August 28, 2024 and sell it today you would earn a total of 340.00 from holding VF Corporation or generate 19.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VF Corp. vs. Ree Automotive Holding
Performance |
| Timeline |
| VF Corporation |
| Ree Automotive Holding |
VF and Ree Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VF and Ree Automotive
The main advantage of trading using opposite VF and Ree Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF position performs unexpectedly, Ree Automotive 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 Ree Automotive will offset losses from the drop in Ree Automotive's long position.The idea behind VF Corporation and Ree Automotive Holding 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.| Ree Automotive vs. VF Corporation | Ree Automotive vs. Levi Strauss Co | Ree Automotive vs. Under Armour A | Ree Automotive vs. Oxford Industries |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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