Correlation Between Vestis and NextTrip
Can any of the company-specific risk be diversified away by investing in both Vestis and NextTrip 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 Vestis and NextTrip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestis and NextTrip, you can compare the effects of market volatilities on Vestis and NextTrip 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 Vestis with a short position of NextTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestis and NextTrip.
Diversification Opportunities for Vestis and NextTrip
Very weak diversification
The 3 months correlation between Vestis and NextTrip is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vestis and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip and Vestis 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 Vestis are associated (or correlated) with NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Vestis i.e., Vestis and NextTrip go up and down completely randomly.
Pair Corralation between Vestis and NextTrip
Given the investment horizon of 90 days Vestis is expected to generate 2.94 times less return on investment than NextTrip. But when comparing it to its historical volatility, Vestis is 2.8 times less risky than NextTrip. It trades about 0.01 of its potential returns per unit of risk. NextTrip is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,391 in NextTrip on August 27, 2024 and sell it today you would lose (1,114) from holding NextTrip or give up 80.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 64.62% |
| Values | Daily Returns |
Vestis vs. NextTrip
Performance |
| Timeline |
| Vestis |
| NextTrip |
Vestis and NextTrip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestis and NextTrip
The main advantage of trading using opposite Vestis and NextTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis position performs unexpectedly, NextTrip 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 NextTrip will offset losses from the drop in NextTrip's long position.| Vestis vs. PROG Holdings | Vestis vs. McGrath RentCorp | Vestis vs. Mega Matrix Corp | Vestis vs. FTAI Aviation Ltd |
| NextTrip vs. Vestis | NextTrip vs. Summit Hotel Properties | NextTrip vs. Herc Holdings | NextTrip vs. Triton International Limited |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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