Correlation Between VSE and CBIZ
Can any of the company-specific risk be diversified away by investing in both VSE and CBIZ 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 VSE and CBIZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and CBIZ Inc, you can compare the effects of market volatilities on VSE and CBIZ 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 VSE with a short position of CBIZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and CBIZ.
Diversification Opportunities for VSE and CBIZ
Very poor diversification
The 3 months correlation between VSE and CBIZ is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc and VSE 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 VSE Corporation are associated (or correlated) with CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of VSE i.e., VSE and CBIZ go up and down completely randomly.
Pair Corralation between VSE and CBIZ
Given the investment horizon of 90 days VSE Corporation is expected to generate 1.58 times more return on investment than CBIZ. However, VSE is 1.58 times more volatile than CBIZ Inc. It trades about 0.08 of its potential returns per unit of risk. CBIZ Inc is currently generating about 0.07 per unit of risk. If you would invest 4,440 in VSE Corporation on August 30, 2024 and sell it today you would earn a total of 7,186 from holding VSE Corporation or generate 161.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. CBIZ Inc
Performance |
| Timeline |
| VSE Corporation |
| CBIZ Inc |
VSE and CBIZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and CBIZ
The main advantage of trading using opposite VSE and CBIZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, CBIZ 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 CBIZ will offset losses from the drop in CBIZ's long position.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto 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 Stocks Directory module to find actively traded stocks across global markets.
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