Correlation Between Vacasa and Phunware

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

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

Diversification Opportunities for Vacasa and Phunware

-0.59

Correlation Coefficient

Vacasa  Phunware

Excellent diversification

The 3 months correlation between Vacasa and Phunware is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vacasa Inc and Phunware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phunware and Vacasa 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 Vacasa Inc are associated (or correlated) with Phunware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phunware has no effect on the direction of Vacasa i.e., Vacasa and Phunware go up and down completely randomly.

Pair Corralation between Vacasa and Phunware

Given the investment horizon of 90 days Vacasa is expected to generate 3.28 times less return on investment than Phunware. But when comparing it to its historical volatility, Vacasa Inc is 2.01 times less risky than Phunware. It trades about 0.06 of its potential returns per unit of risk. Phunware is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  341.00  in Phunware on August 30, 2024 and sell it today you would earn a total of  100.00  from holding Phunware or generate 29.33% return on investment over 90 days.

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

Vacasa Inc  vs.  Phunware

Vacasa Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vacasa Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Vacasa sustained solid returns over the last few months and may actually be approaching a breakup point.

Phunware

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phunware are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Phunware displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vacasa and Phunware

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

The idea behind Vacasa Inc and Phunware 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.