Correlation Between EQUIFAX and Valens

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

By analyzing existing cross correlation between EQUIFAX INC 7 and Valens, you can compare the effects of market volatilities on EQUIFAX and Valens 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 EQUIFAX with a short position of Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQUIFAX and Valens.

Diversification Opportunities for EQUIFAX and Valens

-0.28

Correlation Coefficient

EQUIFAX  Valens

Very good diversification

The 3 months correlation between EQUIFAX and Valens is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EQUIFAX INC 7 and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and EQUIFAX 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 EQUIFAX INC 7 are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of EQUIFAX i.e., EQUIFAX and Valens go up and down completely randomly.

Pair Corralation between EQUIFAX and Valens

Assuming the 90 days trading horizon EQUIFAX INC 7 is expected to under-perform the Valens. But the bond apears to be less risky and, when comparing its historical volatility, EQUIFAX INC 7 is 5.14 times less risky than Valens. The bond trades about -0.05 of its potential returns per unit of risk. The Valens is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Valens on December 4, 2024 and sell it today you would lose (3.00) from holding Valens or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.24%
Values	Daily Returns

EQUIFAX INC 7  vs.  Valens

EQUIFAX INC 7

Risk-Adjusted Performance

Very Weak

Over the last 90 days EQUIFAX INC 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EQUIFAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Valens

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with EQUIFAX and Valens

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

The idea behind EQUIFAX INC 7 and Valens 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.