Correlation Between VivoPower International and Columbia Ultra

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

By analyzing existing cross correlation between VivoPower International PLC and Columbia Ultra Short, you can compare the effects of market volatilities on VivoPower International and Columbia Ultra 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 VivoPower International with a short position of Columbia Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of VivoPower International and Columbia Ultra.

Diversification Opportunities for VivoPower International and Columbia Ultra

-0.66

Correlation Coefficient

VivoPower International  Columbia Ultra

Excellent diversification

The 3 months correlation between VivoPower and Columbia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Columbia Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Ultra Short and VivoPower International 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 VivoPower International PLC are associated (or correlated) with Columbia Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Ultra Short has no effect on the direction of VivoPower International i.e., VivoPower International and Columbia Ultra go up and down completely randomly.

Pair Corralation between VivoPower International and Columbia Ultra

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 168.77 times more return on investment than Columbia Ultra. However, VivoPower International is 168.77 times more volatile than Columbia Ultra Short. It trades about 0.02 of its potential returns per unit of risk. Columbia Ultra Short is currently generating about 0.19 per unit of risk. If you would invest  186.00  in VivoPower International PLC on September 5, 2024 and sell it today you would lose (49.00) from holding VivoPower International PLC or give up 26.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

VivoPower International PLC  vs.  Columbia Ultra Short

VivoPower International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Columbia Ultra Short

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Columbia Ultra Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Columbia Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VivoPower International and Columbia Ultra

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

The idea behind VivoPower International PLC and Columbia Ultra Short 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.