Correlation Between Envirotech Vehicles and Blue Bird

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

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

Diversification Opportunities for Envirotech Vehicles and Blue Bird

0.53

Correlation Coefficient

Envirotech Vehicles  Blue Bird

Very weak diversification

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

Pair Corralation between Envirotech Vehicles and Blue Bird

Given the investment horizon of 90 days Envirotech Vehicles is expected to under-perform the Blue Bird. In addition to that, Envirotech Vehicles is 1.39 times more volatile than Blue Bird Corp. It trades about -0.13 of its total potential returns per unit of risk. Blue Bird Corp is currently generating about -0.1 per unit of volatility. If you would invest  5,022  in Blue Bird Corp on September 13, 2024 and sell it today you would lose (887.00) from holding Blue Bird Corp or give up 17.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Envirotech Vehicles  vs.  Blue Bird Corp

Envirotech Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envirotech Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Blue Bird Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Bird Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Envirotech Vehicles and Blue Bird

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

The idea behind Envirotech Vehicles and Blue Bird Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.