Correlation Between Future Retail and V2 Retail

Can any of the company-specific risk be diversified away by investing in both Future Retail and V2 Retail 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 Future Retail and V2 Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Future Retail Limited and V2 Retail Limited, you can compare the effects of market volatilities on Future Retail and V2 Retail 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 Future Retail with a short position of V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Retail and V2 Retail.

Diversification Opportunities for Future Retail and V2 Retail

0.0

Correlation Coefficient

Future Retail  V2 Retail

Pay attention - limited upside

The 3 months correlation between Future and V2RETAIL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Future Retail Limited and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail Limited and Future Retail 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 Future Retail Limited are associated (or correlated) with V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of Future Retail i.e., Future Retail and V2 Retail go up and down completely randomly.

Pair Corralation between Future Retail and V2 Retail

If you would invest  132,515  in V2 Retail Limited on November 29, 2024 and sell it today you would earn a total of  42,090  from holding V2 Retail Limited or generate 31.76% return on investment over 90 days.

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

Future Retail Limited  vs.  V2 Retail Limited

Future Retail Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Future Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Future Retail is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

V2 Retail Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Future Retail and V2 Retail

The main advantage of trading using opposite Future Retail and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Retail position performs unexpectedly, V2 Retail 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind Future Retail Limited and V2 Retail Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.