Correlation Between VOXX International and Lantronix

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

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

Diversification Opportunities for VOXX International and Lantronix

-0.04

Correlation Coefficient

VOXX International  Lantronix

Good diversification

The 3 months correlation between VOXX and Lantronix is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Lantronix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantronix 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 Lantronix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantronix has no effect on the direction of VOXX International i.e., VOXX International and Lantronix go up and down completely randomly.

Pair Corralation between VOXX International and Lantronix

Given the investment horizon of 90 days VOXX International is expected to generate 0.81 times more return on investment than Lantronix. However, VOXX International is 1.23 times less risky than Lantronix. It trades about 0.16 of its potential returns per unit of risk. Lantronix is currently generating about -0.02 per unit of risk. If you would invest  537.00  in VOXX International on September 3, 2024 and sell it today you would earn a total of  244.00  from holding VOXX International or generate 45.44% return on investment over 90 days.

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

VOXX International  vs.  Lantronix

VOXX International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Lantronix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with VOXX International and Lantronix

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

The idea behind VOXX International and Lantronix 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.