Correlation Between Blue Line and V2X

Can any of the company-specific risk be diversified away by investing in both Blue Line and V2X 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 Blue Line and V2X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Line Protection and V2X Inc, you can compare the effects of market volatilities on Blue Line and V2X 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 Blue Line with a short position of V2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Line and V2X.

Diversification Opportunities for Blue Line and V2X

0.64

Correlation Coefficient

Blue Line  V2X

Poor diversification

The 3 months correlation between Blue and V2X is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blue Line Protection and V2X Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2X Inc and Blue Line 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 Blue Line Protection are associated (or correlated) with V2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2X Inc has no effect on the direction of Blue Line i.e., Blue Line and V2X go up and down completely randomly.

Pair Corralation between Blue Line and V2X

Given the investment horizon of 90 days Blue Line is expected to generate 1.63 times less return on investment than V2X. In addition to that, Blue Line is 5.31 times more volatile than V2X Inc. It trades about 0.03 of its total potential returns per unit of risk. V2X Inc is currently generating about 0.26 per unit of volatility. If you would invest  4,844  in V2X Inc on October 22, 2024 and sell it today you would earn a total of  449.00  from holding V2X Inc or generate 9.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Blue Line Protection  vs.  V2X Inc

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Blue Line is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

V2X Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V2X Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Blue Line and V2X

The main advantage of trading using opposite Blue Line and V2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Line position performs unexpectedly, V2X 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 V2X will offset losses from the drop in V2X's long position.

The idea behind Blue Line Protection and V2X Inc 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.