Correlation Between VINCI and THENA
Can any of the company-specific risk be diversified away by investing in both VINCI and THENA 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 VINCI and THENA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VINCI and THENA, you can compare the effects of market volatilities on VINCI and THENA 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 VINCI with a short position of THENA. Check out your portfolio center. Please also check ongoing floating volatility patterns of VINCI and THENA.
Diversification Opportunities for VINCI and THENA
Very weak diversification
The 3 months correlation between VINCI and THENA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding VINCI and THENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THENA and VINCI 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 VINCI are associated (or correlated) with THENA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THENA has no effect on the direction of VINCI i.e., VINCI and THENA go up and down completely randomly.
Pair Corralation between VINCI and THENA
Assuming the 90 days trading horizon VINCI is expected to generate 0.34 times more return on investment than THENA. However, VINCI is 2.98 times less risky than THENA. It trades about 0.21 of its potential returns per unit of risk. THENA is currently generating about -0.54 per unit of risk. If you would invest 1,180 in VINCI on November 1, 2024 and sell it today you would earn a total of 116.00 from holding VINCI or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
VINCI vs. THENA
Performance |
| Timeline |
| VINCI |
| THENA |
VINCI and THENA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VINCI and THENA
The main advantage of trading using opposite VINCI and THENA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VINCI position performs unexpectedly, THENA 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 THENA will offset losses from the drop in THENA's long position.The idea behind VINCI and THENA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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