Correlation Between Vuzix Corp and EBay

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

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

Diversification Opportunities for Vuzix Corp and EBay

-0.83

Correlation Coefficient

Vuzix Corp  EBay

Pay attention - limited upside

The 3 months correlation between Vuzix and EBay is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vuzix Corp Cmn and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Vuzix Corp 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 Vuzix Corp Cmn are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Vuzix Corp i.e., Vuzix Corp and EBay go up and down completely randomly.

Pair Corralation between Vuzix Corp and EBay

Given the investment horizon of 90 days Vuzix Corp Cmn is expected to under-perform the EBay. In addition to that, Vuzix Corp is 2.51 times more volatile than eBay Inc. It trades about -0.02 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.03 per unit of volatility. If you would invest  4,462  in eBay Inc on January 31, 2024 and sell it today you would earn a total of  813.00  from holding eBay Inc or generate 18.22% return on investment over 90 days.

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

Vuzix Corp Cmn  vs.  eBay Inc

Vuzix Corp Cmn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vuzix Corp Cmn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

eBay Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EBay showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vuzix Corp and EBay

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

The idea behind Vuzix Corp Cmn and eBay Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.