Correlation Between VOXX International and Vuzix Corp

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

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

Diversification Opportunities for VOXX International and Vuzix Corp

0.62

Correlation Coefficient

VOXX International  Vuzix Corp

Poor diversification

The 3 months correlation between VOXX and Vuzix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn and VOXX International 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 VOXX International are associated (or correlated) with Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of VOXX International i.e., VOXX International and Vuzix Corp go up and down completely randomly.

Pair Corralation between VOXX International and Vuzix Corp

Given the investment horizon of 90 days VOXX International is expected to generate 2.62 times less return on investment than Vuzix Corp. But when comparing it to its historical volatility, VOXX International is 1.9 times less risky than Vuzix Corp. It trades about 0.16 of its potential returns per unit of risk. Vuzix Corp Cmn is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Vuzix Corp Cmn on September 2, 2024 and sell it today you would earn a total of  140.00  from holding Vuzix Corp Cmn or generate 153.85% return on investment over 90 days.

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

VOXX International  vs.  Vuzix Corp Cmn

VOXX International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Vuzix Corp Cmn

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vuzix Corp Cmn are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Vuzix Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VOXX International and Vuzix Corp

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

The idea behind VOXX International and Vuzix Corp Cmn 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.