Correlation Between Wearable Devices and VF

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

By analyzing existing cross correlation between Wearable Devices and VF Corporation, you can compare the effects of market volatilities on Wearable Devices and VF 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 Wearable Devices with a short position of VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wearable Devices and VF.

Diversification Opportunities for Wearable Devices and VF

-0.43

Correlation Coefficient

Wearable Devices  VF

Very good diversification

The 3 months correlation between Wearable and VF is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation and Wearable Devices 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 Wearable Devices are associated (or correlated) with VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Wearable Devices i.e., Wearable Devices and VF go up and down completely randomly.

Pair Corralation between Wearable Devices and VF

Given the investment horizon of 90 days Wearable Devices is expected to generate 3.45 times more return on investment than VF. However, Wearable Devices is 3.45 times more volatile than VF Corporation. It trades about 0.25 of its potential returns per unit of risk. VF Corporation is currently generating about 0.0 per unit of risk. If you would invest  173.00  in Wearable Devices on October 8, 2024 and sell it today you would earn a total of  55.00  from holding Wearable Devices or generate 31.79% return on investment over 90 days.

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

Wearable Devices  vs.  VF Corp.

Wearable Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

VF Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, VF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wearable Devices and VF

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

The idea behind Wearable Devices and VF Corporation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.