Correlation Between Wearable Devices and VOXX International

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

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

Diversification Opportunities for Wearable Devices and VOXX International

0.52

Correlation Coefficient

Wearable Devices  VOXX International

Very weak diversification

The 3 months correlation between Wearable and VOXX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International and Wearable Devices 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 Wearable Devices are associated (or correlated) with VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Wearable Devices i.e., Wearable Devices and VOXX International go up and down completely randomly.

Pair Corralation between Wearable Devices and VOXX International

Assuming the 90 days horizon Wearable Devices is expected to generate 46.31 times more return on investment than VOXX International. However, Wearable Devices is 46.31 times more volatile than VOXX International. It trades about 0.2 of its potential returns per unit of risk. VOXX International is currently generating about 0.06 per unit of risk. If you would invest  0.10  in Wearable Devices on September 27, 2024 and sell it today you would earn a total of  28.90  from holding Wearable Devices or generate 28900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.81%
Values	Daily Returns

Wearable Devices  vs.  VOXX International

Wearable Devices

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wearable Devices are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Wearable Devices showed solid returns over the last few months and may actually be approaching a breakup point.

VOXX International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wearable Devices and VOXX International

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

The idea behind Wearable Devices and VOXX International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.