Correlation Between Auddia and VF

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

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

Diversification Opportunities for Auddia and VF

0.07

Correlation Coefficient

Auddia  VF

Significant diversification

The 3 months correlation between Auddia and VF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation and Auddia 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 Auddia Inc 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 Auddia i.e., Auddia and VF go up and down completely randomly.

Pair Corralation between Auddia and VF

Assuming the 90 days horizon Auddia is expected to generate 1.46 times less return on investment than VF. In addition to that, Auddia is 4.63 times more volatile than VF Corporation. It trades about 0.01 of its total potential returns per unit of risk. VF Corporation is currently generating about 0.07 per unit of volatility. If you would invest  1,812  in VF Corporation on September 16, 2024 and sell it today you would earn a total of  296.00  from holding VF Corporation or generate 16.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.15%
Values	Daily Returns

Auddia Inc  vs.  VF Corp.

Auddia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auddia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak fundamental indicators, Auddia showed solid returns over the last few months and may actually be approaching a breakup point.

VF Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, VF exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auddia and VF

The main advantage of trading using opposite Auddia and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auddia 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 Auddia Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.