Correlation Between Vela Income and Vela International
Can any of the company-specific risk be diversified away by investing in both Vela Income and Vela International 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 Vela Income and Vela International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vela Income Opportunities and Vela International, you can compare the effects of market volatilities on Vela Income and Vela International 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 Vela Income with a short position of Vela International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vela Income and Vela International.
Diversification Opportunities for Vela Income and Vela International
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vela and Vela is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vela Income Opportunities and Vela International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela International and Vela Income 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 Vela Income Opportunities are associated (or correlated) with Vela International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela International has no effect on the direction of Vela Income i.e., Vela Income and Vela International go up and down completely randomly.
Pair Corralation between Vela Income and Vela International
Assuming the 90 days horizon Vela Income Opportunities is expected to generate 0.71 times more return on investment than Vela International. However, Vela Income Opportunities is 1.41 times less risky than Vela International. It trades about 0.09 of its potential returns per unit of risk. Vela International is currently generating about 0.04 per unit of risk. If you would invest 843.00 in Vela Income Opportunities on August 31, 2024 and sell it today you would earn a total of 149.00 from holding Vela Income Opportunities or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vela Income Opportunities vs. Vela International
Performance |
| Timeline |
| Vela Income Opportunities |
| Vela International |
Vela Income and Vela International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vela Income and Vela International
The main advantage of trading using opposite Vela Income and Vela International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vela Income position performs unexpectedly, Vela International 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 Vela International will offset losses from the drop in Vela International's long position.| Vela Income vs. Inflation Protected Bond Fund | Vela Income vs. Calamos Dynamic Convertible | Vela Income vs. Multisector Bond Sma | Vela Income vs. Federated Ultrashort Bond |
| Vela International vs. Allianzgi Convertible Income | Vela International vs. Fidelity Sai Convertible | Vela International vs. Harbor Vertible Securities | Vela International vs. Advent Claymore Convertible |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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