Correlation Between VGI Public and Rabbit Holdings

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

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

Diversification Opportunities for VGI Public and Rabbit Holdings

-0.67

Correlation Coefficient

VGI Public  Rabbit Holdings

Excellent diversification

The 3 months correlation between VGI and Rabbit is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and Rabbit Holdings PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rabbit Holdings PCL and VGI Public 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 VGI Public are associated (or correlated) with Rabbit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rabbit Holdings PCL has no effect on the direction of VGI Public i.e., VGI Public and Rabbit Holdings go up and down completely randomly.

Pair Corralation between VGI Public and Rabbit Holdings

Assuming the 90 days trading horizon VGI Public is expected to generate 0.88 times more return on investment than Rabbit Holdings. However, VGI Public is 1.14 times less risky than Rabbit Holdings. It trades about 0.35 of its potential returns per unit of risk. Rabbit Holdings PCL is currently generating about -0.1 per unit of risk. If you would invest  272.00  in VGI Public on September 27, 2024 and sell it today you would earn a total of  68.00  from holding VGI Public or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

VGI Public  vs.  Rabbit Holdings PCL

VGI Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, VGI Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rabbit Holdings PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rabbit Holdings PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with VGI Public and Rabbit Holdings

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

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