Correlation Between VGP NV and GIMV NV

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

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

Diversification Opportunities for VGP NV and GIMV NV

0.82

Correlation Coefficient

VGP NV  GIMV NV

Very poor diversification

The 3 months correlation between VGP and GIMV is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV NV and VGP NV 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 VGP NV are associated (or correlated) with GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of VGP NV i.e., VGP NV and GIMV NV go up and down completely randomly.

Pair Corralation between VGP NV and GIMV NV

Assuming the 90 days trading horizon VGP NV is expected to under-perform the GIMV NV. In addition to that, VGP NV is 1.5 times more volatile than GIMV NV. It trades about -0.1 of its total potential returns per unit of risk. GIMV NV is currently generating about 0.0 per unit of volatility. If you would invest  4,075  in GIMV NV on September 3, 2024 and sell it today you would lose (20.00) from holding GIMV NV or give up 0.49% of portfolio value over 90 days.

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

VGP NV  vs.  GIMV NV

VGP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VGP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

GIMV NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIMV NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GIMV NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VGP NV and GIMV NV

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

The idea behind VGP NV and GIMV NV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.