Correlation Between Volcon and PHINIA

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

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

Diversification Opportunities for Volcon and PHINIA

-0.64

Correlation Coefficient

Volcon  PHINIA

Excellent diversification

The 3 months correlation between Volcon and PHINIA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Volcon Inc and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc and Volcon 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 Volcon Inc are associated (or correlated) with PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Volcon i.e., Volcon and PHINIA go up and down completely randomly.

Pair Corralation between Volcon and PHINIA

Given the investment horizon of 90 days Volcon Inc is expected to generate 2.79 times more return on investment than PHINIA. However, Volcon is 2.79 times more volatile than PHINIA Inc. It trades about 0.1 of its potential returns per unit of risk. PHINIA Inc is currently generating about -0.3 per unit of risk. If you would invest  397.00  in Volcon Inc on October 6, 2024 and sell it today you would earn a total of  27.00  from holding Volcon Inc or generate 6.8% return on investment over 90 days.

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

Volcon Inc  vs.  PHINIA Inc

Volcon Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volcon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PHINIA Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, PHINIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Volcon and PHINIA

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

The idea behind Volcon Inc and PHINIA Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.