Correlation Between Vacasa and Riskified

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

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

Diversification Opportunities for Vacasa and Riskified

0.79

Correlation Coefficient

Vacasa  Riskified

Poor diversification

The 3 months correlation between Vacasa and Riskified is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vacasa Inc and Riskified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskified 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 Riskified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskified has no effect on the direction of Vacasa i.e., Vacasa and Riskified go up and down completely randomly.

Pair Corralation between Vacasa and Riskified

Given the investment horizon of 90 days Vacasa Inc is expected to generate 2.89 times more return on investment than Riskified. However, Vacasa is 2.89 times more volatile than Riskified. It trades about 0.08 of its potential returns per unit of risk. Riskified is currently generating about 0.07 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	Significant
Accuracy	100.0%
Values	Daily Returns

Vacasa Inc  vs.  Riskified

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.

Riskified

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Riskified are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Riskified may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vacasa and Riskified

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

The idea behind Vacasa Inc and Riskified 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.