Correlation Between VSE and Ammo Preferred

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

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

Diversification Opportunities for VSE and Ammo Preferred

0.47

Correlation Coefficient

VSE  Ammo Preferred

Very weak diversification

The 3 months correlation between VSE and Ammo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Ammo Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Preferred 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 Ammo Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Preferred has no effect on the direction of VSE i.e., VSE and Ammo Preferred go up and down completely randomly.

Pair Corralation between VSE and Ammo Preferred

Given the investment horizon of 90 days VSE is expected to generate 2.53 times less return on investment than Ammo Preferred. In addition to that, VSE is 1.47 times more volatile than Ammo Preferred. It trades about 0.05 of its total potential returns per unit of risk. Ammo Preferred is currently generating about 0.17 per unit of volatility. If you would invest  1,883  in Ammo Preferred on October 20, 2024 and sell it today you would earn a total of  79.00  from holding Ammo Preferred or generate 4.2% return on investment over 90 days.

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

VSE Corp.  vs.  Ammo Preferred

VSE Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, VSE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ammo Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ammo Preferred is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VSE and Ammo Preferred

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

The idea behind VSE Corporation and Ammo Preferred 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 Transaction History module to view history of all your transactions and understand their impact on performance.