Correlation Between VivoPower International and Baron Durable

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

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

Diversification Opportunities for VivoPower International and Baron Durable

0.53

Correlation Coefficient

VivoPower International  Baron Durable

Very weak diversification

The 3 months correlation between VivoPower and Baron is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage and VivoPower 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 VivoPower International PLC are associated (or correlated) with Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of VivoPower International i.e., VivoPower International and Baron Durable go up and down completely randomly.

Pair Corralation between VivoPower International and Baron Durable

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 13.24 times more return on investment than Baron Durable. However, VivoPower International is 13.24 times more volatile than Baron Durable Advantage. It trades about 0.11 of its potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.08 per unit of risk. If you would invest  100.00  in VivoPower International PLC on September 28, 2024 and sell it today you would earn a total of  52.00  from holding VivoPower International PLC or generate 52.0% return on investment over 90 days.

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

VivoPower International PLC  vs.  Baron Durable Advantage

VivoPower International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Baron Durable Advantage

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Durable Advantage are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baron Durable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VivoPower International and Baron Durable

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

The idea behind VivoPower International PLC and Baron Durable Advantage 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.