Correlation Between Vista Outdoor and Sturm Ruger

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

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

Diversification Opportunities for Vista Outdoor and Sturm Ruger

-0.47

Correlation Coefficient

Vista Outdoor  Sturm Ruger

Very good diversification

The 3 months correlation between Vista and Sturm is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and Sturm Ruger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturm Ruger and Vista Outdoor 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 Vista Outdoor are associated (or correlated) with Sturm Ruger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturm Ruger has no effect on the direction of Vista Outdoor i.e., Vista Outdoor and Sturm Ruger go up and down completely randomly.

Pair Corralation between Vista Outdoor and Sturm Ruger

Given the investment horizon of 90 days Vista Outdoor is expected to generate 0.12 times more return on investment than Sturm Ruger. However, Vista Outdoor is 8.06 times less risky than Sturm Ruger. It trades about 0.25 of its potential returns per unit of risk. Sturm Ruger is currently generating about -0.2 per unit of risk. If you would invest  4,391  in Vista Outdoor on August 27, 2024 and sell it today you would earn a total of  48.00  from holding Vista Outdoor or generate 1.09% return on investment over 90 days.

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

Vista Outdoor  vs.  Sturm Ruger

Vista Outdoor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Outdoor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vista Outdoor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Sturm Ruger

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vista Outdoor and Sturm Ruger

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

The idea behind Vista Outdoor and Sturm Ruger 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.