Correlation Between Vodka Brands and 629377CH3

Can any of the company-specific risk be diversified away by investing in both Vodka Brands and 629377CH3 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 Vodka Brands and 629377CH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vodka Brands Corp and NRG Energy 525, you can compare the effects of market volatilities on Vodka Brands and 629377CH3 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 Vodka Brands with a short position of 629377CH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodka Brands and 629377CH3.

Diversification Opportunities for Vodka Brands and 629377CH3

-0.25

Correlation Coefficient

Vodka Brands  629377CH3

Very good diversification

The 3 months correlation between Vodka and 629377CH3 is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and NRG Energy 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 525 and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with 629377CH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy 525 has no effect on the direction of Vodka Brands i.e., Vodka Brands and 629377CH3 go up and down completely randomly.

Pair Corralation between Vodka Brands and 629377CH3

Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 0.61 times more return on investment than 629377CH3. However, Vodka Brands Corp is 1.63 times less risky than 629377CH3. It trades about -0.21 of its potential returns per unit of risk. NRG Energy 525 is currently generating about -0.25 per unit of risk. If you would invest  112.00  in Vodka Brands Corp on October 4, 2024 and sell it today you would lose (5.00) from holding Vodka Brands Corp or give up 4.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Vodka Brands Corp  vs.  NRG Energy 525

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NRG Energy 525

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRG Energy 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NRG Energy 525 investors.

Pair Trading with Vodka Brands and 629377CH3

The main advantage of trading using opposite Vodka Brands and 629377CH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands position performs unexpectedly, 629377CH3 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 629377CH3 will offset losses from the drop in 629377CH3's long position.

The idea behind Vodka Brands Corp and NRG Energy 525 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.