Correlation Between Expensify and Red Violet

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

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

Diversification Opportunities for Expensify and Red Violet

-0.16

Correlation Coefficient

Expensify  Red Violet

Good diversification

The 3 months correlation between Expensify and Red is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Expensify and Red Violet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Violet and Expensify 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 Expensify are associated (or correlated) with Red Violet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Violet has no effect on the direction of Expensify i.e., Expensify and Red Violet go up and down completely randomly.

Pair Corralation between Expensify and Red Violet

Given the investment horizon of 90 days Expensify is expected to under-perform the Red Violet. In addition to that, Expensify is 2.4 times more volatile than Red Violet. It trades about -0.15 of its total potential returns per unit of risk. Red Violet is currently generating about -0.06 per unit of volatility. If you would invest  1,795  in Red Violet on February 2, 2024 and sell it today you would lose (94.00) from holding Red Violet or give up 5.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Expensify  vs.  Red Violet

Expensify

Risk-Adjusted Performance

1 of 100

Weak

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

Red Violet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Violet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Expensify and Red Violet

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

The idea behind Expensify and Red Violet 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.