Correlation Between VOXX International and Wearable Devices

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

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

Diversification Opportunities for VOXX International and Wearable Devices

-0.1

Correlation Coefficient

VOXX International  Wearable Devices

Good diversification

The 3 months correlation between VOXX and Wearable is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices and VOXX 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 VOXX International are associated (or correlated) with Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of VOXX International i.e., VOXX International and Wearable Devices go up and down completely randomly.

Pair Corralation between VOXX International and Wearable Devices

Given the investment horizon of 90 days VOXX International is expected to generate 1.43 times less return on investment than Wearable Devices. But when comparing it to its historical volatility, VOXX International is 3.4 times less risky than Wearable Devices. It trades about 0.02 of its potential returns per unit of risk. Wearable Devices is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  285.00  in Wearable Devices on January 31, 2024 and sell it today you would lose (248.00) from holding Wearable Devices or give up 87.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.79%
Values	Daily Returns

VOXX International  vs.  Wearable Devices

VOXX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VOXX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Wearable Devices

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wearable Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Wearable Devices may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with VOXX International and Wearable Devices

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

The idea behind VOXX International and Wearable Devices 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..