Correlation Between VSE and Draganfly

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

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

Diversification Opportunities for VSE and Draganfly

-0.61

Correlation Coefficient

VSE  Draganfly

Excellent diversification

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

Pair Corralation between VSE and Draganfly

Given the investment horizon of 90 days VSE Corporation is expected to generate 0.42 times more return on investment than Draganfly. However, VSE Corporation is 2.41 times less risky than Draganfly. It trades about 0.14 of its potential returns per unit of risk. Draganfly is currently generating about -0.06 per unit of risk. If you would invest  9,673  in VSE Corporation on December 28, 2024 and sell it today you would earn a total of  2,600  from holding VSE Corporation or generate 26.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

VSE Corp.  vs.  Draganfly

VSE Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Draganfly

Risk-Adjusted Performance

Very Weak

Over the last 90 days Draganfly has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with VSE and Draganfly

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

The idea behind VSE Corporation and Draganfly 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.