Correlation Between Yerbae Brands and Haivision Systems

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

By analyzing existing cross correlation between Yerbae Brands Corp and Haivision Systems, you can compare the effects of market volatilities on Yerbae Brands and Haivision Systems 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 Yerbae Brands with a short position of Haivision Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yerbae Brands and Haivision Systems.

Diversification Opportunities for Yerbae Brands and Haivision Systems

-0.53

Correlation Coefficient

Yerbae Brands  Haivision Systems

Excellent diversification

The 3 months correlation between Yerbae and Haivision is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Yerbae Brands Corp and Haivision Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haivision Systems and Yerbae Brands 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 Yerbae Brands Corp are associated (or correlated) with Haivision Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haivision Systems has no effect on the direction of Yerbae Brands i.e., Yerbae Brands and Haivision Systems go up and down completely randomly.

Pair Corralation between Yerbae Brands and Haivision Systems

Assuming the 90 days trading horizon Yerbae Brands Corp is expected to generate 3.79 times more return on investment than Haivision Systems. However, Yerbae Brands is 3.79 times more volatile than Haivision Systems. It trades about 0.09 of its potential returns per unit of risk. Haivision Systems is currently generating about 0.07 per unit of risk. If you would invest  11.00  in Yerbae Brands Corp on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Yerbae Brands Corp or generate 9.09% return on investment over 90 days.

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

Yerbae Brands Corp  vs.  Haivision Systems

Yerbae Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Haivision Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haivision Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Haivision Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yerbae Brands and Haivision Systems

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

The idea behind Yerbae Brands Corp and Haivision Systems 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.