Correlation Between Vestis and Avista

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

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

Diversification Opportunities for Vestis and Avista

0.27

Correlation Coefficient

Vestis  Avista

Modest diversification

The 3 months correlation between Vestis and Avista is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vestis and Avista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avista and Vestis 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 Vestis are associated (or correlated) with Avista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avista has no effect on the direction of Vestis i.e., Vestis and Avista go up and down completely randomly.

Pair Corralation between Vestis and Avista

Given the investment horizon of 90 days Vestis is expected to under-perform the Avista. In addition to that, Vestis is 1.41 times more volatile than Avista. It trades about -0.23 of its total potential returns per unit of risk. Avista is currently generating about -0.02 per unit of volatility. If you would invest  3,798  in Avista on August 19, 2024 and sell it today you would lose (23.00) from holding Avista or give up 0.61% of portfolio value over 90 days.

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

Vestis  vs.  Avista

Vestis

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vestis is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Avista

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avista has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avista is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vestis and Avista

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

The idea behind Vestis and Avista 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.