Correlation Between Clarus Corp and Vista Outdoor

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

By analyzing existing cross correlation between Clarus Corp and Vista Outdoor, you can compare the effects of market volatilities on Clarus Corp and Vista Outdoor 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 Clarus Corp with a short position of Vista Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clarus Corp and Vista Outdoor.

Diversification Opportunities for Clarus Corp and Vista Outdoor

0.1

Correlation Coefficient

Clarus Corp  Vista Outdoor

Average diversification

The 3 months correlation between Clarus and Vista is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Clarus Corp and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor and Clarus Corp 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 Clarus Corp are associated (or correlated) with Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Clarus Corp i.e., Clarus Corp and Vista Outdoor go up and down completely randomly.

Pair Corralation between Clarus Corp and Vista Outdoor

Given the investment horizon of 90 days Clarus Corp is expected to generate 1.22 times less return on investment than Vista Outdoor. In addition to that, Clarus Corp is 1.66 times more volatile than Vista Outdoor. It trades about 0.06 of its total potential returns per unit of risk. Vista Outdoor is currently generating about 0.12 per unit of volatility. If you would invest  4,004  in Vista Outdoor on August 30, 2024 and sell it today you would earn a total of  459.00  from holding Vista Outdoor or generate 11.46% return on investment over 90 days.

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

Clarus Corp  vs.  Vista Outdoor

Clarus Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clarus Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clarus Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Vista Outdoor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Outdoor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vista Outdoor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Clarus Corp and Vista Outdoor

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

The idea behind Clarus Corp and Vista Outdoor 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.