Correlation Between Everspin Technologies and Valens

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

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

Diversification Opportunities for Everspin Technologies and Valens

-0.08

Correlation Coefficient

Everspin Technologies  Valens

Good diversification

The 3 months correlation between Everspin and Valens is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and Everspin Technologies 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 Everspin Technologies are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Everspin Technologies i.e., Everspin Technologies and Valens go up and down completely randomly.

Pair Corralation between Everspin Technologies and Valens

Given the investment horizon of 90 days Everspin Technologies is expected to generate 0.61 times more return on investment than Valens. However, Everspin Technologies is 1.65 times less risky than Valens. It trades about 0.04 of its potential returns per unit of risk. Valens is currently generating about 0.01 per unit of risk. If you would invest  600.00  in Everspin Technologies on September 20, 2024 and sell it today you would earn a total of  23.00  from holding Everspin Technologies or generate 3.83% return on investment over 90 days.

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

Everspin Technologies  vs.  Valens

Everspin Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Valens is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Everspin Technologies and Valens

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

The idea behind Everspin Technologies and Valens 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 Global Correlations module to find global opportunities by holding instruments from different markets.