Correlation Between Vy Columbia and First Investors

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

Diversification Opportunities for Vy Columbia and First Investors

0.9

Correlation Coefficient

Vy Columbia  First Investors

Almost no diversification

The 3 months correlation between VYRDX and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vy Columbia Small and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Vy Columbia i.e., Vy Columbia and First Investors go up and down completely randomly.

Pair Corralation between Vy Columbia and First Investors

Assuming the 90 days horizon Vy Columbia is expected to generate 1.29 times less return on investment than First Investors. But when comparing it to its historical volatility, Vy Columbia Small is 1.0 times less risky than First Investors. It trades about 0.12 of its potential returns per unit of risk. First Investors Select is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,231  in First Investors Select on October 25, 2024 and sell it today you would earn a total of  30.00  from holding First Investors Select or generate 2.44% return on investment over 90 days.

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

Vy Columbia Small  vs.  First Investors Select

Vy Columbia Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Columbia Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Vy Columbia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Investors Select

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Select are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, First Investors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vy Columbia and First Investors

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

The idea behind Vy Columbia Small and First Investors Select 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.