Correlation Between Vicinity and Phoenix

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

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

Diversification Opportunities for Vicinity and Phoenix

0.52

Correlation Coefficient

Vicinity  Phoenix

Very weak diversification

The 3 months correlation between Vicinity and Phoenix is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Motor Corp and Phoenix Motor Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Motor Common and Vicinity 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 Vicinity Motor Corp are associated (or correlated) with Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Motor Common has no effect on the direction of Vicinity i.e., Vicinity and Phoenix go up and down completely randomly.

Pair Corralation between Vicinity and Phoenix

Considering the 90-day investment horizon Vicinity Motor Corp is expected to under-perform the Phoenix. But the stock apears to be less risky and, when comparing its historical volatility, Vicinity Motor Corp is 1.25 times less risky than Phoenix. The stock trades about -0.13 of its potential returns per unit of risk. The Phoenix Motor Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Phoenix Motor Common on September 15, 2024 and sell it today you would lose (14.00) from holding Phoenix Motor Common or give up 31.11% of portfolio value over 90 days.

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

Vicinity Motor Corp  vs.  Phoenix Motor Common

Vicinity Motor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Motor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Phoenix Motor Common

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Motor Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Phoenix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vicinity and Phoenix

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

The idea behind Vicinity Motor Corp and Phoenix Motor Common 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.