Correlation Between Vroom, Common and Kingsway Financial

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

By analyzing existing cross correlation between Vroom, Common Stock and Kingsway Financial Services, you can compare the effects of market volatilities on Vroom, Common and Kingsway Financial 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 Vroom, Common with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vroom, Common and Kingsway Financial.

Diversification Opportunities for Vroom, Common and Kingsway Financial

-0.74

Correlation Coefficient

Vroom, Common  Kingsway Financial

Pay attention - limited upside

The 3 months correlation between Vroom, and Kingsway is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vroom, Common Stock and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and Vroom, Common 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 Vroom, Common Stock are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Vroom, Common i.e., Vroom, Common and Kingsway Financial go up and down completely randomly.

Pair Corralation between Vroom, Common and Kingsway Financial

Considering the 90-day investment horizon Vroom, Common Stock is expected to generate 26.9 times more return on investment than Kingsway Financial. However, Vroom, Common is 26.9 times more volatile than Kingsway Financial Services. It trades about 0.13 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.04 per unit of risk. If you would invest  525.00  in Vroom, Common Stock on December 28, 2024 and sell it today you would earn a total of  2,365  from holding Vroom, Common Stock or generate 450.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Vroom, Common Stock  vs.  Kingsway Financial Services

Vroom, Common Stock

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vroom, Common Stock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vroom, Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Kingsway Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kingsway Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vroom, Common and Kingsway Financial

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

The idea behind Vroom, Common Stock and Kingsway Financial Services 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.