Correlation Between Auburn National and Vail Resorts

Can any of the company-specific risk be diversified away by investing in both Auburn National and Vail Resorts 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 Auburn National and Vail Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auburn National Bancorporation and Vail Resorts, you can compare the effects of market volatilities on Auburn National and Vail Resorts 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 Auburn National with a short position of Vail Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Vail Resorts.

Diversification Opportunities for Auburn National and Vail Resorts

0.56

Correlation Coefficient

Auburn National  Vail Resorts

Very weak diversification

The 3 months correlation between Auburn and Vail is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Auburn National i.e., Auburn National and Vail Resorts go up and down completely randomly.

Pair Corralation between Auburn National and Vail Resorts

Given the investment horizon of 90 days Auburn National Bancorporation is expected to generate 1.3 times more return on investment than Vail Resorts. However, Auburn National is 1.3 times more volatile than Vail Resorts. It trades about 0.12 of its potential returns per unit of risk. Vail Resorts is currently generating about 0.06 per unit of risk. If you would invest  1,982  in Auburn National Bancorporation on September 15, 2024 and sell it today you would earn a total of  366.00  from holding Auburn National Bancorporation or generate 18.47% return on investment over 90 days.

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

Auburn National Bancorp.  vs.  Vail Resorts

Auburn National Banc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National displayed solid returns over the last few months and may actually be approaching a breakup point.

Vail Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Auburn National and Vail Resorts

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

The idea behind Auburn National Bancorporation and Vail Resorts 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.