Correlation Between Defense And and Usa Mutuals

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

By analyzing existing cross correlation between Defense And Aerospace and Usa Mutuals Vice, you can compare the effects of market volatilities on Defense And and Usa Mutuals 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 Defense And with a short position of Usa Mutuals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defense And and Usa Mutuals.

Diversification Opportunities for Defense And and Usa Mutuals

0.39

Correlation Coefficient

Defense And  Usa Mutuals

Weak diversification

The 3 months correlation between Defense and Usa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Defense And Aerospace and Usa Mutuals Vice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usa Mutuals Vice and Defense And 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 Defense And Aerospace are associated (or correlated) with Usa Mutuals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usa Mutuals Vice has no effect on the direction of Defense And i.e., Defense And and Usa Mutuals go up and down completely randomly.

Pair Corralation between Defense And and Usa Mutuals

Assuming the 90 days horizon Defense And is expected to generate 2.39 times less return on investment than Usa Mutuals. In addition to that, Defense And is 1.59 times more volatile than Usa Mutuals Vice. It trades about 0.05 of its total potential returns per unit of risk. Usa Mutuals Vice is currently generating about 0.18 per unit of volatility. If you would invest  2,110  in Usa Mutuals Vice on December 19, 2024 and sell it today you would earn a total of  181.00  from holding Usa Mutuals Vice or generate 8.58% return on investment over 90 days.

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

Defense And Aerospace  vs.  Usa Mutuals Vice

Defense And Aerospace

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Defense And Aerospace are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Defense And is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Usa Mutuals Vice

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Usa Mutuals Vice are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Usa Mutuals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Defense And and Usa Mutuals

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

The idea behind Defense And Aerospace and Usa Mutuals Vice 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.