Correlation Between Vesper Large and Acquirers

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

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

Diversification Opportunities for Vesper Large and Acquirers

0.92

Correlation Coefficient

Vesper Large  Acquirers

Almost no diversification

The 3 months correlation between Vesper and Acquirers is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vesper Large Cap and The Acquirers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acquirers and Vesper Large 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 Vesper Large Cap are associated (or correlated) with Acquirers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acquirers has no effect on the direction of Vesper Large i.e., Vesper Large and Acquirers go up and down completely randomly.

Pair Corralation between Vesper Large and Acquirers

Given the investment horizon of 90 days Vesper Large is expected to generate 1.61 times less return on investment than Acquirers. But when comparing it to its historical volatility, Vesper Large Cap is 1.87 times less risky than Acquirers. It trades about 0.19 of its potential returns per unit of risk. The Acquirers is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,694  in The Acquirers on September 12, 2024 and sell it today you would earn a total of  464.00  from holding The Acquirers or generate 12.56% return on investment over 90 days.

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

Vesper Large Cap  vs.  The Acquirers

Vesper Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vesper Large Cap are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vesper Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Acquirers

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Acquirers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Acquirers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vesper Large and Acquirers

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

The idea behind Vesper Large Cap and The Acquirers 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.