Correlation Between True Public and VGI Public

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

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

Diversification Opportunities for True Public and VGI Public

-0.47

Correlation Coefficient

True Public  VGI Public

Very good diversification

The 3 months correlation between True and VGI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding True Public and VGI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VGI Public and True Public 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 True Public are associated (or correlated) with VGI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VGI Public has no effect on the direction of True Public i.e., True Public and VGI Public go up and down completely randomly.

Pair Corralation between True Public and VGI Public

Assuming the 90 days trading horizon True Public is expected to under-perform the VGI Public. But the stock apears to be less risky and, when comparing its historical volatility, True Public is 1.26 times less risky than VGI Public. The stock trades about -0.12 of its potential returns per unit of risk. The VGI Public is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  280.00  in VGI Public on October 9, 2024 and sell it today you would earn a total of  66.00  from holding VGI Public or generate 23.57% return on investment over 90 days.

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

True Public  vs.  VGI Public

True Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

VGI Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, VGI Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with True Public and VGI Public

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

The idea behind True Public and VGI Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.