Correlation Between AXIL Brands and VivoPower International

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

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

Diversification Opportunities for AXIL Brands and VivoPower International

0.55

Correlation Coefficient

AXIL Brands  VivoPower International

Very weak diversification

The 3 months correlation between AXIL and VivoPower is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AXIL Brands and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International 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 VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of AXIL Brands i.e., AXIL Brands and VivoPower International go up and down completely randomly.

Pair Corralation between AXIL Brands and VivoPower International

Given the investment horizon of 90 days AXIL Brands is expected to generate 5.01 times less return on investment than VivoPower International. But when comparing it to its historical volatility, AXIL Brands is 2.07 times less risky than VivoPower International. It trades about 0.0 of its potential returns per unit of risk. VivoPower International PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,370  in VivoPower International PLC on March 31, 2024 and sell it today you would lose (1,232) from holding VivoPower International PLC or give up 89.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.18%
Values	Daily Returns

AXIL Brands  vs.  VivoPower International PLC

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.

VivoPower International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXIL Brands and VivoPower International

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

The idea behind AXIL Brands and VivoPower International PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.