Correlation Between VSE and International Consolidated

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

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

Diversification Opportunities for VSE and International Consolidated

-0.53

Correlation Coefficient

VSE  International Consolidated

Excellent diversification

The 3 months correlation between VSE and International is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of VSE i.e., VSE and International Consolidated go up and down completely randomly.

Pair Corralation between VSE and International Consolidated

Given the investment horizon of 90 days VSE Corporation is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, VSE Corporation is 38.42 times less risky than International Consolidated. The stock trades about -0.29 of its potential returns per unit of risk. The International Consolidated Companies is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2.00  in International Consolidated Companies on September 23, 2024 and sell it today you would earn a total of  0.42  from holding International Consolidated Companies or generate 21.0% return on investment over 90 days.

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

VSE Corp.  vs.  International Consolidated Com

VSE Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 7 (%) 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.

International Consolidated

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VSE and International Consolidated

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

The idea behind VSE Corporation and International Consolidated Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .