Correlation Between Vertiv Holdings and Sinclair

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

By analyzing existing cross correlation between Vertiv Holdings Co and Sinclair Television Group, you can compare the effects of market volatilities on Vertiv Holdings and Sinclair 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 Vertiv Holdings with a short position of Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and Sinclair.

Diversification Opportunities for Vertiv Holdings and Sinclair

0.61

Correlation Coefficient

Vertiv Holdings  Sinclair

Poor diversification

The 3 months correlation between Vertiv and Sinclair is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and Sinclair Television Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinclair Television and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinclair Television has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and Sinclair go up and down completely randomly.

Pair Corralation between Vertiv Holdings and Sinclair

Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 2.49 times more return on investment than Sinclair. However, Vertiv Holdings is 2.49 times more volatile than Sinclair Television Group. It trades about 0.21 of its potential returns per unit of risk. Sinclair Television Group is currently generating about 0.14 per unit of risk. If you would invest  8,301  in Vertiv Holdings Co on August 30, 2024 and sell it today you would earn a total of  4,393  from holding Vertiv Holdings Co or generate 52.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.06%
Values	Daily Returns

Vertiv Holdings Co  vs.  Sinclair Television Group

Vertiv Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertiv Holdings Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vertiv Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sinclair Television

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Television Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Sinclair may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vertiv Holdings and Sinclair

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

The idea behind Vertiv Holdings Co and Sinclair Television Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.