Correlation Between Vicinity and Blue Bird

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

By analyzing existing cross correlation between Vicinity Motor Corp and Blue Bird Corp, you can compare the effects of market volatilities on Vicinity and Blue Bird 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 Vicinity with a short position of Blue Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity and Blue Bird.

Diversification Opportunities for Vicinity and Blue Bird

0.0

Correlation Coefficient

Vicinity  Blue Bird

Pay attention - limited upside

The 3 months correlation between Vicinity and Blue is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Motor Corp and Blue Bird Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Bird Corp and Vicinity 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 Vicinity Motor Corp are associated (or correlated) with Blue Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Bird Corp has no effect on the direction of Vicinity i.e., Vicinity and Blue Bird go up and down completely randomly.

Pair Corralation between Vicinity and Blue Bird

If you would invest (100.00) in Vicinity Motor Corp on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Vicinity Motor Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vicinity Motor Corp  vs.  Blue Bird Corp

Vicinity Motor Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vicinity Motor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Vicinity is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Blue Bird Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Bird Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Vicinity and Blue Bird

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

The idea behind Vicinity Motor Corp and Blue Bird Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.