Correlation Between Twin Vee and Peloton Interactive

Can any of the company-specific risk be diversified away by investing in both Twin Vee and Peloton Interactive 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 Peloton Interactive 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 Peloton Interactive, you can compare the effects of market volatilities on Twin Vee and Peloton Interactive 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 Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Vee and Peloton Interactive.

Diversification Opportunities for Twin Vee and Peloton Interactive

-0.76

Correlation Coefficient

Twin Vee  Peloton Interactive

Pay attention - limited upside

The 3 months correlation between Twin and Peloton is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Twin Vee Powercats and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive 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 Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Twin Vee i.e., Twin Vee and Peloton Interactive go up and down completely randomly.

Pair Corralation between Twin Vee and Peloton Interactive

Given the investment horizon of 90 days Twin Vee Powercats is expected to under-perform the Peloton Interactive. In addition to that, Twin Vee is 1.33 times more volatile than Peloton Interactive. It trades about -0.15 of its total potential returns per unit of risk. Peloton Interactive is currently generating about 0.23 per unit of volatility. If you would invest  800.00  in Peloton Interactive on September 15, 2024 and sell it today you would earn a total of  158.00  from holding Peloton Interactive or generate 19.75% return on investment over 90 days.

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

Twin Vee Powercats  vs.  Peloton Interactive

Twin Vee Powercats

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twin Vee Powercats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Peloton Interactive

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peloton Interactive are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Peloton Interactive displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Twin Vee and Peloton Interactive

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

The idea behind Twin Vee Powercats and Peloton Interactive 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.