Correlation Between VivoPower International and Columbia

Can any of the company-specific risk be diversified away by investing in both VivoPower International and Columbia 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 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 Treasury Index, you can compare the effects of market volatilities on VivoPower International and Columbia 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of VivoPower International and Columbia.

Diversification Opportunities for VivoPower International and Columbia

0.67

Correlation Coefficient

VivoPower International  Columbia

Poor diversification

The 3 months correlation between VivoPower and Columbia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Columbia Treasury Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Treasury Index 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Treasury Index has no effect on the direction of VivoPower International i.e., VivoPower International and Columbia go up and down completely randomly.

Pair Corralation between VivoPower International and Columbia

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 54.92 times more return on investment than Columbia. However, VivoPower International is 54.92 times more volatile than Columbia Treasury Index. It trades about 0.2 of its potential returns per unit of risk. Columbia Treasury Index is currently generating about 0.04 per unit of risk. If you would invest  84.00  in VivoPower International PLC on September 5, 2024 and sell it today you would earn a total of  53.00  from holding VivoPower International PLC or generate 63.1% return on investment over 90 days.

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

VivoPower International PLC  vs.  Columbia Treasury Index

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 Treasury Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Treasury Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia 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

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

The idea behind VivoPower International PLC and Columbia Treasury Index 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.