Correlation Between AXIL Brands and VHAI

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

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

Diversification Opportunities for AXIL Brands and VHAI

0.6

Correlation Coefficient

AXIL Brands  VHAI

Poor diversification

The 3 months correlation between AXIL and VHAI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AXIL Brands and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI and AXIL Brands 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 AXIL Brands are associated (or correlated) with VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of AXIL Brands i.e., AXIL Brands and VHAI go up and down completely randomly.

Pair Corralation between AXIL Brands and VHAI

Given the investment horizon of 90 days AXIL Brands is expected to generate 0.57 times more return on investment than VHAI. However, AXIL Brands is 1.75 times less risky than VHAI. It trades about -0.1 of its potential returns per unit of risk. VHAI is currently generating about -0.25 per unit of risk. If you would invest  1,294  in AXIL Brands on March 31, 2024 and sell it today you would lose (570.00) from holding AXIL Brands or give up 44.05% of portfolio value over 90 days.

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

AXIL Brands  vs.  VHAI

AXIL Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXIL Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AXIL Brands and VHAI

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

The idea behind AXIL Brands and VHAI 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 Global Correlations module to find global opportunities by holding instruments from different markets.