Correlation Between Vita Coco and Vestis

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

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

Diversification Opportunities for Vita Coco and Vestis

-0.55

Correlation Coefficient

Vita Coco  Vestis

Excellent diversification

The 3 months correlation between Vita and Vestis is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Vita Coco i.e., Vita Coco and Vestis go up and down completely randomly.

Pair Corralation between Vita Coco and Vestis

Given the investment horizon of 90 days Vita Coco is expected to generate 0.9 times more return on investment than Vestis. However, Vita Coco is 1.11 times less risky than Vestis. It trades about 0.07 of its potential returns per unit of risk. Vestis is currently generating about -0.16 per unit of risk. If you would invest  3,554  in Vita Coco on November 28, 2024 and sell it today you would earn a total of  262.00  from holding Vita Coco or generate 7.37% return on investment over 90 days.

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

Vita Coco  vs.  Vestis

Vita Coco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Vestis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vita Coco and Vestis

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

The idea behind Vita Coco and Vestis 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .