Correlation Between Velocity Financial and Income Opportunity

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

By analyzing existing cross correlation between Velocity Financial Llc and Income Opportunity Realty, you can compare the effects of market volatilities on Velocity Financial and Income Opportunity 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 Velocity Financial with a short position of Income Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velocity Financial and Income Opportunity.

Diversification Opportunities for Velocity Financial and Income Opportunity

-0.65

Correlation Coefficient

Velocity Financial  Income Opportunity

Excellent diversification

The 3 months correlation between Velocity and Income is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Velocity Financial Llc and Income Opportunity Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Opportunity Realty and Velocity Financial 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 Velocity Financial Llc are associated (or correlated) with Income Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Opportunity Realty has no effect on the direction of Velocity Financial i.e., Velocity Financial and Income Opportunity go up and down completely randomly.

Pair Corralation between Velocity Financial and Income Opportunity

Considering the 90-day investment horizon Velocity Financial Llc is expected to under-perform the Income Opportunity. But the stock apears to be less risky and, when comparing its historical volatility, Velocity Financial Llc is 2.15 times less risky than Income Opportunity. The stock trades about -0.05 of its potential returns per unit of risk. The Income Opportunity Realty is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,675  in Income Opportunity Realty on October 7, 2024 and sell it today you would earn a total of  125.00  from holding Income Opportunity Realty or generate 7.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.73%
Values	Daily Returns

Velocity Financial Llc  vs.  Income Opportunity Realty

Velocity Financial Llc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Velocity Financial Llc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Velocity Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Income Opportunity Realty

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Income Opportunity Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Income Opportunity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Velocity Financial and Income Opportunity

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

The idea behind Velocity Financial Llc and Income Opportunity Realty 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.