Correlation Between Applied Blockchain and Vertiv Holdings

Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and Vertiv Holdings 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 Applied Blockchain and Vertiv Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Blockchain and Vertiv Holdings Co, you can compare the effects of market volatilities on Applied Blockchain and Vertiv Holdings 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 Applied Blockchain with a short position of Vertiv Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and Vertiv Holdings.

Diversification Opportunities for Applied Blockchain and Vertiv Holdings

0.8

Correlation Coefficient

Applied Blockchain  Vertiv Holdings

Very poor diversification

The 3 months correlation between Applied and Vertiv is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Vertiv Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertiv Holdings and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Vertiv Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertiv Holdings has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Vertiv Holdings go up and down completely randomly.

Pair Corralation between Applied Blockchain and Vertiv Holdings

Given the investment horizon of 90 days Applied Blockchain is expected to generate 2.35 times more return on investment than Vertiv Holdings. However, Applied Blockchain is 2.35 times more volatile than Vertiv Holdings Co. It trades about 0.08 of its potential returns per unit of risk. Vertiv Holdings Co is currently generating about 0.15 per unit of risk. If you would invest  159.00  in Applied Blockchain on August 30, 2024 and sell it today you would earn a total of  799.00  from holding Applied Blockchain or generate 502.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Applied Blockchain  vs.  Vertiv Holdings Co

Applied Blockchain

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vertiv Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertiv Holdings Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vertiv Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Blockchain and Vertiv Holdings

The main advantage of trading using opposite Applied Blockchain and Vertiv Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Vertiv Holdings 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 Vertiv Holdings will offset losses from the drop in Vertiv Holdings' long position.

The idea behind Applied Blockchain and Vertiv Holdings Co 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.