Correlation Between Singing Machine and Vuzix Corp

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

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

Diversification Opportunities for Singing Machine and Vuzix Corp

0.12

Correlation Coefficient

Singing Machine  Vuzix Corp

Average diversification

The 3 months correlation between Singing and Vuzix is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Singing Machine and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn and Singing Machine 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 The Singing Machine are associated (or correlated) with Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of Singing Machine i.e., Singing Machine and Vuzix Corp go up and down completely randomly.

Pair Corralation between Singing Machine and Vuzix Corp

Given the investment horizon of 90 days The Singing Machine is expected to generate 1.4 times more return on investment than Vuzix Corp. However, Singing Machine is 1.4 times more volatile than Vuzix Corp Cmn. It trades about 0.06 of its potential returns per unit of risk. Vuzix Corp Cmn is currently generating about -0.06 per unit of risk. If you would invest  98.00  in The Singing Machine on February 22, 2024 and sell it today you would earn a total of  43.00  from holding The Singing Machine or generate 43.88% return on investment over 90 days.

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

The Singing Machine  vs.  Vuzix Corp Cmn

Singing Machine

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Singing Machine are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Singing Machine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vuzix Corp Cmn

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vuzix Corp Cmn are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Vuzix Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Singing Machine and Vuzix Corp

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

The idea behind The Singing Machine and Vuzix Corp Cmn 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.