Correlation Between VictoryShares THB and Defiance Hotel

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

By analyzing existing cross correlation between VictoryShares THB Mid and Defiance Hotel Airline, you can compare the effects of market volatilities on VictoryShares THB and Defiance Hotel 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 VictoryShares THB with a short position of Defiance Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares THB and Defiance Hotel.

Diversification Opportunities for VictoryShares THB and Defiance Hotel

-0.06

Correlation Coefficient

VictoryShares THB  Defiance Hotel

Good diversification

The 3 months correlation between VictoryShares and Defiance is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and Defiance Hotel Airline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Hotel Airline and VictoryShares THB 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 VictoryShares THB Mid are associated (or correlated) with Defiance Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Hotel Airline has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and Defiance Hotel go up and down completely randomly.

Pair Corralation between VictoryShares THB and Defiance Hotel

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the Defiance Hotel. But the etf apears to be less risky and, when comparing its historical volatility, VictoryShares THB Mid is 1.11 times less risky than Defiance Hotel. The etf trades about -0.04 of its potential returns per unit of risk. The Defiance Hotel Airline is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,424  in Defiance Hotel Airline on October 21, 2024 and sell it today you would earn a total of  255.00  from holding Defiance Hotel Airline or generate 10.52% return on investment over 90 days.

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

VictoryShares THB Mid  vs.  Defiance Hotel Airline

VictoryShares THB Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Defiance Hotel Airline

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Hotel Airline are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Defiance Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VictoryShares THB and Defiance Hotel

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

The idea behind VictoryShares THB Mid and Defiance Hotel Airline 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.