Correlation Between Village Super and Arhaus

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

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

Diversification Opportunities for Village Super and Arhaus

0.57

Correlation Coefficient

Village Super  Arhaus

Very weak diversification

The 3 months correlation between Village and Arhaus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Village Super 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 Village Super Market are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Village Super i.e., Village Super and Arhaus go up and down completely randomly.

Pair Corralation between Village Super and Arhaus

Assuming the 90 days horizon Village Super Market is expected to generate 0.63 times more return on investment than Arhaus. However, Village Super Market is 1.59 times less risky than Arhaus. It trades about 0.05 of its potential returns per unit of risk. Arhaus Inc is currently generating about -0.03 per unit of risk. If you would invest  2,937  in Village Super Market on October 26, 2024 and sell it today you would earn a total of  372.00  from holding Village Super Market or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Village Super Market  vs.  Arhaus Inc

Village Super Market

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Village Super sustained solid returns over the last few months and may actually be approaching a breakup point.

Arhaus Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Arhaus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Village Super and Arhaus

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

The idea behind Village Super Market and Arhaus 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.