Correlation Between VSE and National Presto
Can any of the company-specific risk be diversified away by investing in both VSE and National Presto 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 National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and National Presto Industries, you can compare the effects of market volatilities on VSE and National Presto 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 National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and National Presto.
Diversification Opportunities for VSE and National Presto
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VSE and National is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu 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 National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of VSE i.e., VSE and National Presto go up and down completely randomly.
Pair Corralation between VSE and National Presto
Given the investment horizon of 90 days VSE is expected to generate 1.03 times less return on investment than National Presto. In addition to that, VSE is 1.66 times more volatile than National Presto Industries. It trades about 0.17 of its total potential returns per unit of risk. National Presto Industries is currently generating about 0.28 per unit of volatility. If you would invest 9,400 in National Presto Industries on October 24, 2024 and sell it today you would earn a total of 521.00 from holding National Presto Industries or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. National Presto Industries
Performance |
| Timeline |
| VSE Corporation |
| National Presto Indu |
VSE and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and National Presto
The main advantage of trading using opposite VSE and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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