Correlation Between V2X and New Horizon
Can any of the company-specific risk be diversified away by investing in both V2X and New Horizon 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 V2X and New Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V2X Inc and New Horizon Aircraft, you can compare the effects of market volatilities on V2X and New Horizon 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 V2X with a short position of New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2X and New Horizon.
Diversification Opportunities for V2X and New Horizon
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between V2X and New is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding V2X Inc and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft and V2X 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 V2X Inc are associated (or correlated) with New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of V2X i.e., V2X and New Horizon go up and down completely randomly.
Pair Corralation between V2X and New Horizon
Considering the 90-day investment horizon V2X Inc is expected to generate 0.24 times more return on investment than New Horizon. However, V2X Inc is 4.09 times less risky than New Horizon. It trades about 0.02 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.01 per unit of risk. If you would invest 4,500 in V2X Inc on December 2, 2024 and sell it today you would earn a total of 192.00 from holding V2X Inc or generate 4.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
V2X Inc vs. New Horizon Aircraft
Performance |
Timeline |
V2X Inc |
New Horizon Aircraft |
V2X and New Horizon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with V2X and New Horizon
The main advantage of trading using opposite V2X and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2X position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon's long position.The idea behind V2X Inc and New Horizon Aircraft 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.New Horizon vs. Two Harbors Investments | New Horizon vs. Apartment Investment and | New Horizon vs. United Microelectronics | New Horizon vs. Westshore Terminals Investment |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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