Correlation Between Vecima Networks and High-yield Municipal

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

By analyzing existing cross correlation between Vecima Networks and High Yield Municipal Fund, you can compare the effects of market volatilities on Vecima Networks and High-yield Municipal 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 Vecima Networks with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vecima Networks and High-yield Municipal.

Diversification Opportunities for Vecima Networks and High-yield Municipal

0.12

Correlation Coefficient

Vecima Networks  High-yield Municipal

Average diversification

The 3 months correlation between Vecima and High-yield is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Vecima Networks 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 Vecima Networks are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Vecima Networks i.e., Vecima Networks and High-yield Municipal go up and down completely randomly.

Pair Corralation between Vecima Networks and High-yield Municipal

Assuming the 90 days horizon Vecima Networks is expected to generate 11.81 times more return on investment than High-yield Municipal. However, Vecima Networks is 11.81 times more volatile than High Yield Municipal Fund. It trades about 0.01 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.14 per unit of risk. If you would invest  1,143  in Vecima Networks on October 6, 2024 and sell it today you would lose (32.00) from holding Vecima Networks or give up 2.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.19%
Values	Daily Returns

Vecima Networks  vs.  High Yield Municipal Fund

Vecima Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vecima Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

High Yield Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Yield Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, High-yield Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vecima Networks and High-yield Municipal

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

The idea behind Vecima Networks and High Yield Municipal Fund 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.