Correlation Between Vita Coco and USA Recycling

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

By analyzing existing cross correlation between Vita Coco and USA Recycling Industries, you can compare the effects of market volatilities on Vita Coco and USA Recycling 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 USA Recycling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and USA Recycling.

Diversification Opportunities for Vita Coco and USA Recycling

0.0

Correlation Coefficient

Vita Coco  USA Recycling

Pay attention - limited upside

The 3 months correlation between Vita and USA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and USA Recycling Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Recycling Industries 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 USA Recycling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Recycling Industries has no effect on the direction of Vita Coco i.e., Vita Coco and USA Recycling go up and down completely randomly.

Pair Corralation between Vita Coco and USA Recycling

If you would invest  3,568  in Vita Coco on December 18, 2024 and sell it today you would lose (42.00) from holding Vita Coco or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Vita Coco  vs.  USA Recycling Industries

Vita Coco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vita Coco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Vita Coco is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

USA Recycling Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days USA Recycling Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, USA Recycling is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vita Coco and USA Recycling

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

The idea behind Vita Coco and USA Recycling Industries 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.