Correlation Between VHAI and Global Technology
Can any of the company-specific risk be diversified away by investing in both VHAI and Global Technology 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 VHAI and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VHAI and Global Technology Portfolio, you can compare the effects of market volatilities on VHAI and Global Technology 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 VHAI with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and Global Technology.
Diversification Opportunities for VHAI and Global Technology
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VHAI and Global is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and VHAI 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 VHAI are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of VHAI i.e., VHAI and Global Technology go up and down completely randomly.
Pair Corralation between VHAI and Global Technology
Given the investment horizon of 90 days VHAI is expected to under-perform the Global Technology. In addition to that, VHAI is 9.57 times more volatile than Global Technology Portfolio. It trades about -0.17 of its total potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.12 per unit of volatility. If you would invest 1,061 in Global Technology Portfolio on August 31, 2024 and sell it today you would earn a total of 1,061 from holding Global Technology Portfolio or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 40.67% |
| Values | Daily Returns |
VHAI vs. Global Technology Portfolio
Performance |
| Timeline |
| VHAI |
| Global Technology |
VHAI and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VHAI and Global Technology
The main advantage of trading using opposite VHAI and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| VHAI vs. Ambev SA ADR | VHAI vs. Molson Coors Brewing | VHAI vs. Regeneron Pharmaceuticals | VHAI vs. BioNTech SE |
| Global Technology vs. Black Oak Emerging | Global Technology vs. Angel Oak Multi Strategy | Global Technology vs. Investec Emerging Markets | Global Technology vs. Goldman Sachs Emerging |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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