Correlation Between V2X and Kaman

Can any of the company-specific risk be diversified away by investing in both V2X and Kaman 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 Kaman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V2X Inc and Kaman, you can compare the effects of market volatilities on V2X and Kaman 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 Kaman. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2X and Kaman.

Diversification Opportunities for V2X and Kaman

0.55

Correlation Coefficient

V2X  Kaman

Very weak diversification

The 3 months correlation between V2X and Kaman is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding V2X Inc and Kaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaman 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 Kaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaman has no effect on the direction of V2X i.e., V2X and Kaman go up and down completely randomly.

Pair Corralation between V2X and Kaman

If you would invest  5,453  in V2X Inc on September 3, 2024 and sell it today you would earn a total of  506.00  from holding V2X Inc or generate 9.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

V2X Inc  vs.  Kaman

V2X Inc

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in V2X Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, V2X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kaman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Kaman is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with V2X and Kaman

The main advantage of trading using opposite V2X and Kaman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2X position performs unexpectedly, Kaman 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 Kaman will offset losses from the drop in Kaman's long position.

The idea behind V2X Inc and Kaman 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.