Correlation Between Vericel Corp and VBI Vaccines

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

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

Diversification Opportunities for Vericel Corp and VBI Vaccines

0.13

Correlation Coefficient

Vericel Corp  VBI Vaccines

Average diversification

The 3 months correlation between Vericel and VBI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and VBI Vaccines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VBI Vaccines and Vericel 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 Vericel Corp Ord are associated (or correlated) with VBI Vaccines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VBI Vaccines has no effect on the direction of Vericel Corp i.e., Vericel Corp and VBI Vaccines go up and down completely randomly.

Pair Corralation between Vericel Corp and VBI Vaccines

Given the investment horizon of 90 days Vericel Corp Ord is expected to under-perform the VBI Vaccines. But the stock apears to be less risky and, when comparing its historical volatility, Vericel Corp Ord is 5.03 times less risky than VBI Vaccines. The stock trades about -0.31 of its potential returns per unit of risk. The VBI Vaccines is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  62.00  in VBI Vaccines on January 30, 2024 and sell it today you would lose (3.50) from holding VBI Vaccines or give up 5.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Vericel Corp Ord  vs.  VBI Vaccines

Vericel Corp Ord

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Vericel Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

VBI Vaccines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VBI Vaccines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, VBI Vaccines is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vericel Corp and VBI Vaccines

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

The idea behind Vericel Corp Ord and VBI Vaccines 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.