Correlation Between MARKET VECTR and ACCOR SPADR

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

By analyzing existing cross correlation between MARKET VECTR RETAIL and ACCOR SPADR NEW, you can compare the effects of market volatilities on MARKET VECTR and ACCOR SPADR 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 MARKET VECTR with a short position of ACCOR SPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and ACCOR SPADR.

Diversification Opportunities for MARKET VECTR and ACCOR SPADR

0.88

Correlation Coefficient

MARKET VECTR  ACCOR SPADR

Very poor diversification

The 3 months correlation between MARKET and ACCOR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and ACCOR SPADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCOR SPADR NEW and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with ACCOR SPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCOR SPADR NEW has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and ACCOR SPADR go up and down completely randomly.

Pair Corralation between MARKET VECTR and ACCOR SPADR

Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to under-perform the ACCOR SPADR. But the stock apears to be less risky and, when comparing its historical volatility, MARKET VECTR RETAIL is 1.5 times less risky than ACCOR SPADR. The stock trades about -0.08 of its potential returns per unit of risk. The ACCOR SPADR NEW is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  920.00  in ACCOR SPADR NEW on December 30, 2024 and sell it today you would lose (40.00) from holding ACCOR SPADR NEW or give up 4.35% of portfolio value over 90 days.

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

MARKET VECTR RETAIL  vs.  ACCOR SPADR NEW

MARKET VECTR RETAIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MARKET VECTR RETAIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ACCOR SPADR NEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACCOR SPADR NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ACCOR SPADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MARKET VECTR and ACCOR SPADR

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

The idea behind MARKET VECTR RETAIL and ACCOR SPADR NEW 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.