Correlation Between V2X and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both V2X 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 V2X and SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V2X Inc and SIFCO Industries, you can compare the effects of market volatilities on V2X 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 V2X with a short position of SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2X and SIFCO Industries.
Diversification Opportunities for V2X and SIFCO Industries
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between V2X and SIFCO is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding V2X Inc and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries and V2X 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 V2X Inc 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 V2X i.e., V2X and SIFCO Industries go up and down completely randomly.
Pair Corralation between V2X and SIFCO Industries
Considering the 90-day investment horizon V2X Inc is expected to generate 0.95 times more return on investment than SIFCO Industries. However, V2X Inc is 1.06 times less risky than SIFCO Industries. It trades about 0.07 of its potential returns per unit of risk. SIFCO Industries is currently generating about -0.14 per unit of risk. If you would invest 5,586 in V2X Inc on August 30, 2024 and sell it today you would earn a total of 443.00 from holding V2X Inc or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
V2X Inc vs. SIFCO Industries
Performance |
| Timeline |
| V2X Inc |
| SIFCO Industries |
V2X and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with V2X and SIFCO Industries
The main advantage of trading using opposite V2X and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2X 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.The idea behind V2X Inc and SIFCO Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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