Correlation Between International Consolidated and VSE

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

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

Diversification Opportunities for International Consolidated and VSE

-0.47

Correlation Coefficient

International Consolidated  VSE

Very good diversification

The 3 months correlation between International and VSE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation and International Consolidated 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 International Consolidated Companies are associated (or correlated) with VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of International Consolidated i.e., International Consolidated and VSE go up and down completely randomly.

Pair Corralation between International Consolidated and VSE

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 37.48 times more return on investment than VSE. However, International Consolidated is 37.48 times more volatile than VSE Corporation. It trades about 0.23 of its potential returns per unit of risk. VSE Corporation is currently generating about -0.31 per unit of risk. If you would invest  1.01  in International Consolidated Companies on September 27, 2024 and sell it today you would earn a total of  0.59  from holding International Consolidated Companies or generate 58.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

International Consolidated Com  vs.  VSE Corp.

International Consolidated

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

VSE Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and VSE

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

The idea behind International Consolidated Companies and VSE 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.