Correlation Between Veralto and Fiverr International

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

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

Diversification Opportunities for Veralto and Fiverr International

-0.65

Correlation Coefficient

Veralto  Fiverr International

Excellent diversification

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

Pair Corralation between Veralto and Fiverr International

Given the investment horizon of 90 days Veralto is expected to under-perform the Fiverr International. But the stock apears to be less risky and, when comparing its historical volatility, Veralto is 3.25 times less risky than Fiverr International. The stock trades about -0.02 of its potential returns per unit of risk. The Fiverr International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,397  in Fiverr International on September 2, 2024 and sell it today you would earn a total of  864.00  from holding Fiverr International or generate 36.05% return on investment over 90 days.

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

Veralto  vs.  Fiverr International

Veralto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Veralto is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fiverr International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiverr International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fiverr International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veralto and Fiverr International

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

The idea behind Veralto and Fiverr International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.