Correlation Between Vy Columbia and Cardinal Small

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

By analyzing existing cross correlation between Vy Columbia Small and Cardinal Small Cap, you can compare the effects of market volatilities on Vy Columbia and Cardinal Small 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 Vy Columbia with a short position of Cardinal Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy Columbia and Cardinal Small.

Diversification Opportunities for Vy Columbia and Cardinal Small

0.36

Correlation Coefficient

Vy Columbia  Cardinal Small

Weak diversification

The 3 months correlation between VYRDX and Cardinal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vy Columbia Small and Cardinal Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Small Cap and Vy Columbia 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 Vy Columbia Small are associated (or correlated) with Cardinal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Small Cap has no effect on the direction of Vy Columbia i.e., Vy Columbia and Cardinal Small go up and down completely randomly.

Pair Corralation between Vy Columbia and Cardinal Small

Assuming the 90 days horizon Vy Columbia Small is expected to generate 77.45 times more return on investment than Cardinal Small. However, Vy Columbia is 77.45 times more volatile than Cardinal Small Cap. It trades about 0.14 of its potential returns per unit of risk. Cardinal Small Cap is currently generating about 0.22 per unit of risk. If you would invest  1,644  in Vy Columbia Small on September 13, 2024 and sell it today you would earn a total of  165.00  from holding Vy Columbia Small or generate 10.04% return on investment over 90 days.

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

Vy Columbia Small  vs.  Cardinal Small Cap

Vy Columbia Small

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Columbia Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vy Columbia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cardinal Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vy Columbia and Cardinal Small

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

The idea behind Vy Columbia Small and Cardinal Small Cap 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.