Correlation Between VIA and EM
Can any of the company-specific risk be diversified away by investing in both VIA and EM 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 VIA and EM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIA and EM, you can compare the effects of market volatilities on VIA and EM 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 VIA with a short position of EM. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIA and EM.
Diversification Opportunities for VIA and EM
Pay attention - limited upside
The 3 months correlation between VIA and EM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VIA and EM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EM and VIA 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 VIA are associated (or correlated) with EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EM has no effect on the direction of VIA i.e., VIA and EM go up and down completely randomly.
Pair Corralation between VIA and EM
If you would invest 0.98 in VIA on August 31, 2024 and sell it today you would earn a total of 0.36 from holding VIA or generate 36.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIA vs. EM
Performance |
| Timeline |
| VIA |
| EM |
VIA and EM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIA and EM
The main advantage of trading using opposite VIA and EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIA position performs unexpectedly, EM 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 EM will offset losses from the drop in EM's long position.The idea behind VIA and EM 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |