Correlation Between MARKET VECTR and YASKAWA ELEC

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

By analyzing existing cross correlation between MARKET VECTR RETAIL and YASKAWA ELEC UNSP, you can compare the effects of market volatilities on MARKET VECTR and YASKAWA ELEC 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 MARKET VECTR with a short position of YASKAWA ELEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and YASKAWA ELEC.

Diversification Opportunities for MARKET VECTR and YASKAWA ELEC

-0.76

Correlation Coefficient

MARKET VECTR  YASKAWA ELEC

Pay attention - limited upside

The 3 months correlation between MARKET and YASKAWA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and YASKAWA ELEC UNSP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YASKAWA ELEC UNSP and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with YASKAWA ELEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YASKAWA ELEC UNSP has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and YASKAWA ELEC go up and down completely randomly.

Pair Corralation between MARKET VECTR and YASKAWA ELEC

Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to generate 0.45 times more return on investment than YASKAWA ELEC. However, MARKET VECTR RETAIL is 2.2 times less risky than YASKAWA ELEC. It trades about 0.3 of its potential returns per unit of risk. YASKAWA ELEC UNSP is currently generating about -0.12 per unit of risk. If you would invest  19,134  in MARKET VECTR RETAIL on September 15, 2024 and sell it today you would earn a total of  3,351  from holding MARKET VECTR RETAIL or generate 17.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.94%
Values	Daily Returns

MARKET VECTR RETAIL  vs.  YASKAWA ELEC UNSP

MARKET VECTR RETAIL

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MARKET VECTR exhibited solid returns over the last few months and may actually be approaching a breakup point.

YASKAWA ELEC UNSP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YASKAWA ELEC UNSP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MARKET VECTR and YASKAWA ELEC

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

The idea behind MARKET VECTR RETAIL and YASKAWA ELEC UNSP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.