Correlation Between Vecima Networks and Income Financial

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

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

Diversification Opportunities for Vecima Networks and Income Financial

0.31

Correlation Coefficient

Vecima Networks  Income Financial

Weak diversification

The 3 months correlation between Vecima and Income is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial Trust and Vecima Networks 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 Vecima Networks are associated (or correlated) with Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of Vecima Networks i.e., Vecima Networks and Income Financial go up and down completely randomly.

Pair Corralation between Vecima Networks and Income Financial

Assuming the 90 days trading horizon Vecima Networks is expected to under-perform the Income Financial. In addition to that, Vecima Networks is 1.56 times more volatile than Income Financial Trust. It trades about -0.22 of its total potential returns per unit of risk. Income Financial Trust is currently generating about 0.01 per unit of volatility. If you would invest  850.00  in Income Financial Trust on December 25, 2024 and sell it today you would lose (1.00) from holding Income Financial Trust or give up 0.12% of portfolio value over 90 days.

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

Vecima Networks  vs.  Income Financial Trust

Vecima Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vecima Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Income Financial Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vecima Networks and Income Financial

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

The idea behind Vecima Networks and Income Financial Trust 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.