Correlation Between Vertex and LeddarTech Holdings

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

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

Diversification Opportunities for Vertex and LeddarTech Holdings

-0.36

Correlation Coefficient

Vertex  LeddarTech Holdings

Very good diversification

The 3 months correlation between Vertex and LeddarTech is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and LeddarTech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeddarTech Holdings and Vertex 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 Vertex are associated (or correlated) with LeddarTech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeddarTech Holdings has no effect on the direction of Vertex i.e., Vertex and LeddarTech Holdings go up and down completely randomly.

Pair Corralation between Vertex and LeddarTech Holdings

Given the investment horizon of 90 days Vertex is expected to generate 0.5 times more return on investment than LeddarTech Holdings. However, Vertex is 1.98 times less risky than LeddarTech Holdings. It trades about 0.41 of its potential returns per unit of risk. LeddarTech Holdings is currently generating about 0.06 per unit of risk. If you would invest  4,223  in Vertex on September 5, 2024 and sell it today you would earn a total of  1,469  from holding Vertex or generate 34.79% return on investment over 90 days.

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

Vertex  vs.  LeddarTech Holdings

Vertex

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vertex showed solid returns over the last few months and may actually be approaching a breakup point.

LeddarTech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeddarTech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators 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 Vertex and LeddarTech Holdings

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

The idea behind Vertex and LeddarTech Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.