Correlation Between VSE and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both VSE and SIFCO Industries 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 SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and SIFCO Industries, you can compare the effects of market volatilities on VSE and SIFCO Industries 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 SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and SIFCO Industries.
Diversification Opportunities for VSE and SIFCO Industries
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VSE and SIFCO is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries 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 SIFCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIFCO Industries has no effect on the direction of VSE i.e., VSE and SIFCO Industries go up and down completely randomly.
Pair Corralation between VSE and SIFCO Industries
Given the investment horizon of 90 days VSE Corporation is expected to generate 0.66 times more return on investment than SIFCO Industries. However, VSE Corporation is 1.51 times less risky than SIFCO Industries. It trades about 0.12 of its potential returns per unit of risk. SIFCO Industries is currently generating about 0.04 per unit of risk. If you would invest 6,013 in VSE Corporation on August 26, 2024 and sell it today you would earn a total of 5,685 from holding VSE Corporation or generate 94.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
VSE Corp. vs. SIFCO Industries
Performance |
| Timeline |
| VSE Corporation |
| SIFCO Industries |
VSE and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and SIFCO Industries
The main advantage of trading using opposite VSE and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, SIFCO Industries 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 SIFCO Industries will offset losses from the drop in SIFCO Industries' long position.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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