Correlation Between Vita Coco and Kodiak Gas

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

By analyzing existing cross correlation between Vita Coco and Kodiak Gas Services,, you can compare the effects of market volatilities on Vita Coco and Kodiak Gas 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 Vita Coco with a short position of Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Kodiak Gas.

Diversification Opportunities for Vita Coco and Kodiak Gas

0.73

Correlation Coefficient

Vita Coco  Kodiak Gas

Poor diversification

The 3 months correlation between Vita and Kodiak is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, and Vita Coco 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 Vita Coco are associated (or correlated) with Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Vita Coco i.e., Vita Coco and Kodiak Gas go up and down completely randomly.

Pair Corralation between Vita Coco and Kodiak Gas

Given the investment horizon of 90 days Vita Coco is expected to generate 11.55 times less return on investment than Kodiak Gas. But when comparing it to its historical volatility, Vita Coco is 17.41 times less risky than Kodiak Gas. It trades about 0.09 of its potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Kodiak Gas Services, on October 26, 2024 and sell it today you would earn a total of  4,961  from holding Kodiak Gas Services, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.16%
Values	Daily Returns

Vita Coco  vs.  Kodiak Gas Services,

Vita Coco

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Kodiak Gas Services,

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vita Coco and Kodiak Gas

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

The idea behind Vita Coco and Kodiak Gas Services, 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.