Correlation Between Twin Vee and Curtiss Motorcycles

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

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

Diversification Opportunities for Twin Vee and Curtiss Motorcycles

-0.01

Correlation Coefficient

Twin Vee  Curtiss Motorcycles

Good diversification

The 3 months correlation between Twin and Curtiss is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Twin Vee Powercats and Curtiss Motorcycles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Motorcycles and Twin Vee 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 Twin Vee Powercats are associated (or correlated) with Curtiss Motorcycles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Motorcycles has no effect on the direction of Twin Vee i.e., Twin Vee and Curtiss Motorcycles go up and down completely randomly.

Pair Corralation between Twin Vee and Curtiss Motorcycles

Given the investment horizon of 90 days Twin Vee is expected to generate 2.72 times less return on investment than Curtiss Motorcycles. But when comparing it to its historical volatility, Twin Vee Powercats is 1.97 times less risky than Curtiss Motorcycles. It trades about 0.04 of its potential returns per unit of risk. Curtiss Motorcycles is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3.60  in Curtiss Motorcycles on December 27, 2024 and sell it today you would lose (1.20) from holding Curtiss Motorcycles or give up 33.33% of portfolio value over 90 days.

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

Twin Vee Powercats  vs.  Curtiss Motorcycles

Twin Vee Powercats

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Twin Vee Powercats are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Twin Vee exhibited solid returns over the last few months and may actually be approaching a breakup point.

Curtiss Motorcycles

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Motorcycles are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Curtiss Motorcycles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Twin Vee and Curtiss Motorcycles

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

The idea behind Twin Vee Powercats and Curtiss Motorcycles 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.