Correlation Between VTC and BOX

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

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

Diversification Opportunities for VTC and BOX

0.19

Correlation Coefficient

VTC  BOX

Average diversification

The 3 months correlation between VTC and BOX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding VTC and BOX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOX and VTC 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 VTC are associated (or correlated) with BOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOX has no effect on the direction of VTC i.e., VTC and BOX go up and down completely randomly.

Pair Corralation between VTC and BOX

Assuming the 90 days trading horizon VTC is expected to generate 50.4 times less return on investment than BOX. But when comparing it to its historical volatility, VTC is 5.8 times less risky than BOX. It trades about 0.01 of its potential returns per unit of risk. BOX is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.02  in BOX on September 2, 2024 and sell it today you would earn a total of  0.00  from holding BOX or generate 12.21% return on investment over 90 days.

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

VTC  vs.  BOX

VTC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, VTC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BOX

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BOX are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BOX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC and BOX

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

The idea behind VTC and BOX 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.