Correlation Between VersaBank and VERSES AI

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

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

Diversification Opportunities for VersaBank and VERSES AI

-0.75

Correlation Coefficient

VersaBank  VERSES AI

Pay attention - limited upside

The 3 months correlation between VersaBank and VERSES is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and VERSES AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERSES AI and VersaBank 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 VersaBank are associated (or correlated) with VERSES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERSES AI has no effect on the direction of VersaBank i.e., VersaBank and VERSES AI go up and down completely randomly.

Pair Corralation between VersaBank and VERSES AI

Assuming the 90 days trading horizon VersaBank is expected to under-perform the VERSES AI. But the stock apears to be less risky and, when comparing its historical volatility, VersaBank is 7.35 times less risky than VERSES AI. The stock trades about -0.02 of its potential returns per unit of risk. The VERSES AI is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  58.00  in VERSES AI on October 25, 2024 and sell it today you would earn a total of  122.00  from holding VERSES AI or generate 210.34% return on investment over 90 days.

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

VersaBank  vs.  VERSES AI

VersaBank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VersaBank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VersaBank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

VERSES AI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERSES AI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, VERSES AI exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VersaBank and VERSES AI

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

The idea behind VersaBank and VERSES AI 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.