Correlation Between VOXX International and Kontoor Brands

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

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

Diversification Opportunities for VOXX International and Kontoor Brands

0.09

Correlation Coefficient

VOXX International  Kontoor Brands

Significant diversification

The 3 months correlation between VOXX and Kontoor is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and VOXX International 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 VOXX International 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 VOXX International i.e., VOXX International and Kontoor Brands go up and down completely randomly.

Pair Corralation between VOXX International and Kontoor Brands

If you would invest  0.00  in Kontoor Brands on October 2, 2024 and sell it today you would earn a total of  0.00  from holding Kontoor Brands or generate 0.0% return on investment over 90 days.

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

VOXX International  vs.  Kontoor Brands

VOXX International

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days VOXX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Kontoor Brands

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Kontoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VOXX International and Kontoor Brands

The main advantage of trading using opposite VOXX International and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOXX International 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 VOXX International 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.