Correlation Between Vision Marine and Kontoor Brands

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

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

Diversification Opportunities for Vision Marine and Kontoor Brands

-0.64

Correlation Coefficient

Vision Marine  Kontoor Brands

Excellent diversification

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

Pair Corralation between Vision Marine and Kontoor Brands

Given the investment horizon of 90 days Vision Marine Technologies is expected to under-perform the Kontoor Brands. In addition to that, Vision Marine is 3.44 times more volatile than Kontoor Brands. It trades about -0.13 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.07 per unit of volatility. If you would invest  8,151  in Kontoor Brands on October 12, 2024 and sell it today you would earn a total of  647.00  from holding Kontoor Brands or generate 7.94% return on investment over 90 days.

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

Vision Marine Technologies  vs.  Kontoor Brands

Vision Marine Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vision Marine Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Kontoor Brands

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vision Marine and Kontoor Brands

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

The idea behind Vision Marine Technologies and Kontoor Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.