Correlation Between Vacasa and Domo

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

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

Diversification Opportunities for Vacasa and Domo

0.13

Correlation Coefficient

Vacasa  Domo

Average diversification

The 3 months correlation between Vacasa and Domo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vacasa Inc and Domo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domo Inc and Vacasa 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 Vacasa Inc are associated (or correlated) with Domo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domo Inc has no effect on the direction of Vacasa i.e., Vacasa and Domo go up and down completely randomly.

Pair Corralation between Vacasa and Domo

Given the investment horizon of 90 days Vacasa Inc is expected to generate 1.74 times more return on investment than Domo. However, Vacasa is 1.74 times more volatile than Domo Inc. It trades about 0.08 of its potential returns per unit of risk. Domo Inc is currently generating about 0.05 per unit of risk. If you would invest  376.00  in Vacasa Inc on September 14, 2024 and sell it today you would earn a total of  82.00  from holding Vacasa Inc or generate 21.81% return on investment over 90 days.

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

Vacasa Inc  vs.  Domo Inc

Vacasa Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vacasa Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Vacasa sustained solid returns over the last few months and may actually be approaching a breakup point.

Domo Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Domo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vacasa and Domo

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

The idea behind Vacasa Inc and Domo Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.